Debt: Rising credit spreads and Euribor spare no one – how to avoid credit suffocation?

Debt: Rising credit spreads and Euribor spare no one – how to avoid credit suffocation?

The sovereign spread on French 10-year debt now exceeds that of Italy, fueled by political instability.

Result:

→ Lenders, generally exposed to higher risk than sovereign debt, may see their refinancing costs increase,

→ And companies may face a mechanical rise in credit charges on their borrowings.

To make matters worse: projected Euribor rates are rising, which could further increase the bill.

Bottom line: a double pressure (base rate + credit charge) that can quickly become overwhelming for some borrowers.

The good news? While most credit charges are beyond our control, the Euribor component can be capped through interest rate hedges (caps), which remain reasonably priced.

A hedging strategy can help to:

• Cap costs on the variable portion,

• Smooth out maturities to avoid surprises,

• Anticipate market volatility rather than suffer it.

An unhedged debt today is a risk of overcost tomorrow.

Fifteen years ago, I founded Kerius Finance with a simple conviction: leaders must be able to make informed financial decisions, even in the face of complex financial markets.

Today, Kerius Finance is 3 partners and a team of 10 based in Paris, Lyon, and Geneva, supporting companies every day in their strategic financial choices related to currency fluctuations, interest rates, and commodities.

Our role: protect, anticipate, and guide, so that leaders can focus on what really matters — growing their business.

For inquiries: s.rouzaire@kerius-finance.com, s.huard@kerius-finance.com, m.dondin@kerius-finance.com

Kerius Finance SAS is an authorized Financial Investment Adviser (CIF) – ORIAS No. 13000716 – member of ANACOFI-CIF, an association approved by the French Financial Markets Authority (AMF).