OREANDA-NEWS. Fitch: Key EMEA Corporate Debt Raisers and Cash Flow Bleeders London Fitch Ratings says that while EMEA corporates have managed to keep nominal debt to manageable levels since 2012, deleveraging efforts have been hampered by continuing high levels of capex, M&A and shareholder returns. Slowly improving underlying operating cash generation has not been applied to debt reduction, leaving a broadly neutral free cash-flow position across EMEA corporates between 2012 and 2015.

We have identified the top 10 companies that raised/shed the largest amount of gross debt between 2012 and 2015, and those that are expected to raise/shed the most in over the next two years to end-2017. Forecasting requires us to make certain assumptions on cash holdings versus debt raising, but the top 10 list is a broadly valid indicator of relative debt trajectories for the biggest companies.

Companies have been focusing on cutting costs and restructuring operations in an effort to improve medium-term profitability amidst improving economic conditions in Europe. Shedding non-core assets has been the core driver behind large debt reductions, causing repair situations to vastly outnumber recovery stories in our top 10 lists for both cash-flow boosters and debt shedders.

Oil companies Gazprom, Total and BP head our list of debt raisers, together raising nearly EUR50bn of additional debt since 2012. However, we expect oil majors' aggregate 2016 capex to fall by a further 15%, following an average reduction of 15% in 2015, while opex in the next two to three years will be 30% lower than in 2014. Combined with a mild recovery in oil prices, this will support improving leverage metrics over the next 12 to 18 months.

Our cash-flow boosters are dominated by pharmaceutical companies Roche Holding, Novartis AG and Sanofi SA, although repair, rather than recovery, again dominates. Autos represent one of few sectors where real demand recovery is expected. Utilities are likely to remain significantly FCF negative due to lumpy capex obligations.