March 6, 2020 10:28 am

German Mittelstand: Rising credit risks

Automotive industry in particular affected.

The credit risks of German SMEs continue to rise. This is the result of a recent study by the credit insurer Euler Hermes and Trib Rating. Due to their often high degree of specialization, SMEs are in part more susceptible to negative developments, so that they have proven to be a very good indicator of future trends. In the third quarter of 2018, we saw credit risks among German SMEs rise again for the first time in three years. This short-term increase in risks was in line with the weak economic development of the German economy. Our algorithm reacts immediately even to such selective changes. It also matches the credit rating of our internal credit analysis systems.

According to Euler Hermes, automotive suppliers are particularly affected. These companies already experienced the sharpest increase in credit risks in the second half of 2019. Political and economic risks have a particularly strong impact on these companies. Euler Hermes states that credit risks are currently rising in almost all sectors in Germany. In addition to the automotive industry, the paper industry, textiles, raw materials, and transport and logistics are the main drivers of the negative development. These industries also have the highest credit risk overall. Rather surprisingly, however, is the fact that credit risks for software and IT services have also risen above average – even though the credit risk in this sector is still significantly lower than for German SMEs as a whole. Euler Hermes

This post was written by Jens Secker

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