Source: Torsten Sløk, Deutsche Bank Securities
Torsten Sløk on how companies obtain financing in the US and Europe:
“There are some important differences between how corporates are financed in the US relative to Europe, see chart above, and this is important when thinking about fiscal policy responses, ECB and Fed support facilities, and the overall expected shape of the recovery in different countries.”
Europe has already passed a second fiscal stimulus, which includes loans to companies in response to the pandemic lockdown. Meanwhile, in the US, discussions in DC have faltered over how much aid should be going to small businesses, larger companies, individuals, states and cities. Senate Majority leader Mitch McConnell is at odds with both House Speaker Nay Pelosi and President Donald Trump.
The odds of a CAREs Act 2 passing before January keeps slipping.
Perhaps its structural: The vast majority of European company funding is made straight debt loans. Perhaps this makes it simpler to get Euros to these companies during these challenging economic times.