Danish Companies Repay Debt, Delay Investing as Crisis Persists

Danish companies are repaying debt and shoring up capital instead of investing in new equipment and jobs as access to credit tightens amid the economic crisis, the Confederation of Danish Industry said.

Companies have reduced short-term bank debt by about 160 billion kroner ($26 billion) since a 2008 peak, the Copenhagen- based industry organization said today in an analysis on its website. Companies have cut long-term debt by 50 billion kroner to about 2008 levels, DI said.

Bank loans have become more expensive and difficult to get, according to the association. Some companies with collateral have turned to mortgage loans yet that market can’t compensate for the drop in bank lending, since not all businesses have assets that can be tapped, DI said.

“Financing and access to capital are critical for a businesses to develop and create new jobs,” Maria Pedersen, economic consultant at DI, said in a statement. “Many companies have had - and still have - difficulties getting funding to operate and to develop their businesses.”

To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net