IBEX 35® companies increase their market-based funding to 55%

• Large Spanish listed companies’ dependence of on bank credit has halved in a decade, according to the latest report from BME's Research Department.
• Companies improve their liquidity, net financial debt-to-assets ratio and financial coverage ratio

The financing structure of Spanish listed companies has changed over the last decade. According to the latest report by BME's Research Department with data at the end of 2021, in the last decade bank financing of IBEX 35® companies has gone from 49.6% to 26.3% of their total financial liabilities, while resources in the form of debt securities registered in the markets now account for 54.9% compared to 39.7% ten years ago.

The increase in financing via the financial markets by large Spanish companies has been constant, resulting in less dependence on bank credit. Proof of this increase is the trend of the number of Spanish companies issuing debt, which has risen from 24 in 2011 to 111 in 2021.

"This more diversified structure favours the resilience of companies in situations of financial stress and contagion of crises from the banking system to the real economy. There is a large body of academic literature that also argues that greater financing of companies in the capital markets bring about higher levels of productivity, innovation and technological change than models where financing depends heavily on a dominant supplier," explains Domingo García Coto, Director of BME's Research Department.

Larger companies are the ones that most turn to the markets in search of financing. The five listed companies in the Spanish benchmark with the highest weight of debt financing registered in the markets are Amadeus (89%), Cellnex (86.7%), Telefónica (83.7%), Almirall (79.2%) and ArcelorMittal (70.3%).

In line with global developments, Spanish listed companies increased their financial debt by 5.26% in 2021. Companies took advantage of the favourable market conditions to issue medium and long-term debt (84.7% more). In total, the volume of Spanish Private Debt issued and admitted to trading on the regulated market last year reached 113.1 billion euros.

The pick-up in activity after the pandemic's hiatus enabled companies to improve their liquidity by 45% compared to 2019 and double that of 2015. The ratio of net financial debt to assets improved to 22.9% for IBEX 35® non-financial companies and the value of their equity rose by 21.8% compared to the previous year, thanks to the increase in profits and, in some cases, to the capital increases carried out. Meanwhile, the financial coverage ratio improved to 6.57 times. Meanwhile, the financial coverage ratio of non-financial IBEX Medium Cap® companies was multiplied by 1.5 to 5.15 times at the end of 2021.

Exchange-based financing is not exclusive to larger companies, as evidenced by the steady growth of MARF. BME's fixed income market ended 2021 with 117 issuers and an outstanding balance of 9.6 billion euros, 82% more than the previous year.

The complete report is available (in Spanish) via  this link.