Entwicklung Kommunalfinanzierung

There is no sign of a financial recovery in cities and municipalities any time soon, reports the business magazine “FinanzBusiness” in a recent article. As a result, digital platforms such as Loanboox are becoming increasingly attractive for municipal financing.

The Corona crisis has torn deep holes in the budget coffers of cities and municipalities and, according to “FinanzBusiness”, municipal debt will continue to grow. The magazine quotes a current study by the Federal Statistical Office, according to which the deficit in the first half of 2020 will total 9.7 billion euros. For comparison: In the same period of the previous year, the budget deficit was not even 0.3 billion.

Municipalities must meet their financial obligations.

The main culprit in this development is the slump in trade tax revenues, triggered by the week-long lock-down in the Corona peak. At the same time, however, the necessary expenditures for investment and social services remain high – a challenge for the municipalities.

Digital debt capital market platforms such as Loanboox are feeling the effects of this enormous demand for financing, writes “FinanzBusiness”. The number of tenders on the platform grew by 137 percent in the second quarter of 2020 compared to the previous year.

More investors on board again

Due to permanently low interest rates, liquidity loans with short maturities remain particularly attractive. According to “FinanzBusiness”, however, there is now also a trend towards longer maturities. And: Lenders who had withdrawn from the market at the beginning of the Corona crisis in order to preserve limits are almost back on the debt capital market platform at pre-crisis levels.

“In the year-end business, uncalled funds are usually financed, which is why we expect another surge in demand on the investment side,” Loanboox is quoted as saying.

These expectations are in line with the current market development and other expert forecasts, according to which municipalities need to broaden their financing and think about their investor base. Please also read our current market update for the month of October. It is already clear that the second half of 2020 will remain exciting for borrowers and investors.