Credit Insurer Atradius Views Credit Market Slump as Necessary Correction of Peak

    Highly indebted businesses under scrutiny

    BALTIMORE, Aug. 16 /CNW/ -- Credit insurer Atradius is concerned that the
crises in the U.S. sub-prime mortgage market, currently affecting all major
financial markets, will impact the capability of companies to meet both debt
obligations and obligations towards suppliers in the relatively short term.
    "Most notably, some highly debt-leveraged companies have been taken over
by private equity firms that are under observation," said Amsterdam-based Anno
Kamphuis, Chief Risk Officer of Atradius N.V. "Several private equity
sponsored companies are now more highly indebted than ever before. We believe
this credit market slump marks the end of an era of 'equity anorexia,' the
irrational financial leveraging of companies. Also, we are vigilant on private
equity deals presently in the pipeline."
    According to Atradius, the share of private equity transactions with a
debt-to-operating profit multiple higher than 6 increased to over 36% until
mid 2007. In 2002, this share accounted for only 4%. This illustrates the
increase in debt capital in relation to operating results in some private
equity deals.
    "Like any negative market correction," said Kamphuis, "this one is very
painful, particularly for financial institutions and investors. It will no
doubt also spread to the corporate sector. Still, Atradius believes that a
correction was unavoidable.
    "It may be a good thing that this correction in the credit markets has
happened now, with major European economies still showing reasonably good
growth. This allows companies to generate adequate operational cash flows and
mitigates the risk that companies will be unable to meet debt and trade
payable obligations.
    "We believe a pricing adjustment in corporate debt is required to
re-establish a sound basis for the future. It makes it less attractive to load
companies with unhealthy levels of debt. Certainly in an economic environment
where operational cash generation becomes more uncertain and the price of
corporate debt goes up, it will make companies and their shareholders think
twice about the risk they take by increasing debt of companies to the hilt.
Such adjustments in debt levels will be welcomed by Atradius in its business
of giving corporations continued support in risk mitigation and business
    About Atradius:
    Atradius is a leading credit insurer with total sales of 1.3 billion
euros and a market share of 24 percent on the worldwide credit insurance
market. Every year the corporate group insures trade transactions valued at
400 billion euros against payment risks and provides products and services for
risk transfer and receivables management. With 3,500 employees and more than
90 offices in 40 countries, Atradius has access to information on the credit
ratings of 45 million companies throughout the world and makes over 12,000
credit limit decisions every day. Atradius has an "A" rating from Standard &
Poor's (outlook stable) and an "A2" rating from Moody's (outlook stable).

    For further information:

    Corporate Communications
    Kathy Farley
    Tel.: +1 (410) 246-5584

For further information:

For further information: Kathy Farley, Corporate Communications of 
Atradius, +1-410-246-5584,

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