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Press release: Record low propotion of high credit risk companies

24. Jan 2012

Statistical data of Krediidiinfo AS for the second half-year of 2011 representing Estonian companies’ payment behavior reveals that the number of high credit risk companies has hit a record low, forming only 12% (the corresponding indicator reached 24% last year). This means that it is high time companies dared to sell on credit. 

The sectors where credit risk is slightly above average still include the accommodation and catering sector (25%) and the construction sector (16%). Still, the risk level of these sectors has greatly decreased in comparison with the situation we could see last year. 

The number of companies with payment defaults, i.e. owing money to their partners, has decreased by 19% and stopped at 3,098 companies. The number of companies with tax arrears, i.e. owing money to the state, has decreased by 15% to 5,213 companies within the year. 

According to the information of the Credit Register in the second half-year of 2011 the aggregate sum of payment defaults of all the active companies in Estonia (53,733) amounted to ca 58 million euros; and the sum of tax arrears, to ca 61 million euros. The sums of these arrears decreased by 8% and 13.4% respectively in comparison with last year. 

The number of companies with payment defaults and tax arrears decreased in all the sectors of economy for the first time. That, however, does not apply to the amounts of arrears, which increased in four sectors in comparison with the previous period. This situation implies that the debt burden of the companies that are already in arrears has increased. We are witnessing the polarization of companies: strong ones become stronger, and weak ones become even weaker. 

The amounts of payment defaults increased in the sectors of construction (60%), wholesale and retail (44%) and agriculture (16%). The amounts of tax arrears has increased in the sectors of construction (16%) and administrative and assistance services (1%). The decrease in the amounts of default payments was the most significant in the sectors of finance and insurance (-86%) and accommodation and catering (-58%). 

As far as the distribution of companies by size is concerned, the number of companies in arrears has decreased in all the groups. Large companies are recovering three times faster than the rest.