Equity Injections and Unforeseen State Ownership of Enterprises During the COVID-19 Crisis   [open pdf - 0B]

From the Document: "The COVID-19 [coronavirus disease 2019] outbreak and its containment measures including the lockdown of much of the world's population has put corporate balance sheets under tremendous pressure. As observed during the financial crisis 12 years ago, governments are finding it necessary to engage in multiple rescue operations involving companies deemed to be systemically important. Unlike the previous crisis where government interventions mostly concerned ailing banks, interventions relating to COVID-19 have so far mostly focused on insolvency and illiquidity in industry sectors hard hit by the virus, such as aviation and tourism. Other sectors seem bound to follow as the fallout from the crisis spills over into the second half of the year. The interventions seen so far, as well as any more broadly based government support programmes announced in a number of countries, rely on a mixture of subsidies/state aids to distressed firms; government guarantees; loans at low interest rates and other forms of financing including convertible bonds; and outright equity injections by the state. In a number of cases, governments will find themselves in the role of unintended company owners and indeed a small number of nationalisations have already been undertaken or announced."

2020 OECD
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