The sudden plunge in interest rates over the second half of 2003 has led to a resumption of corporate borrowing activity. With lending rates now lower than the going rate of inflation, companies face little risk when borrowing, and refinancing older debt brings considerable savings.
Despite the favourable financial climate, the imposition of strict exchange controls notwithstanding, political uncertainty is limiting new investment. The majority of firms seeking new financing are companies with steady cash flows, such as utilities, financial institutions and the leasing and lending arms of carmakers. Industries more exposed to consumer demand, such as retail, have not yet returned to the financing market.
