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Global public debt will hit an all-time high in 2020 and this won’t be without consequences for debt sustainability, particularly for the most fragile economies.
Traded companies have seen remarkable investment inflows even as prolonged Covid-19 lockdowns threaten corporate earnings and debt sustainability. These inflows have led to a substantial re-compression of corporate spreads, leaving most sectors trading close to January 2020 levels.
The first wave of Covid-19 lockdowns caused a stronger-than-expected profitability shock for most European non-financial corporates in H1 2020, with French and Spanish firms hit particularly hard despite generous policy support.