A report issued by the trade credit insurance company, Atradius, expects global default rates to rise by more than a quarter this year, with Australia, France and a number of other markets expected to exceed that level by a large margin, Al Qabas reported.
The report highlighted expectations that this year’s global default rates will rise by 26 percent, with bankruptcy levels expected to be higher by the end of 2021 than in the past two years in almost all markets.
“In a challenging business environment, companies face real risks of bankruptcy and defaults,” said Simon Rockett, head of risk underwriting at Atradius.
The report highlighted the factors that shaped its outlook for 2021, the first of which is the unprecedented government support made necessary by the Covid-19 pandemic, as stimulus programs helped stop the collapse and failure of companies in 2020, which was actually reflected in the decline in bankruptcy and default rates, but the halt to subsidies prompted Bankruptcy expectations to rise.
The delay in bankruptcy cases that would have occurred last year also contributed to an expected increase in cases of corporate defaults and collapses, while strong economic growth in 2021 boosted the outlook.