IGTA Journal - Winter 2020/2021

29/01/2021 The sovereign-bank-corporate nexus – virtuous or vicious? https://www.ecb.europa.eu/press/key/date/2021/html/ecb.sp210128~8f5dc86601.en.html 10/13 Sources: Bloomberg and ECB. Notes: White bubbles indicate negative values. There are no ten-year sovereign debt securities for Latvia and Estonia; two-year sovereign bond yields are shown instead as a proxy for Latvia, whereas no suitable proxy could be identified for Estonia. The red horizontal and vertical lines indicate sample medians. The asymmetric impact of the pandemic on different industries has exacerbated prevailing vulnerabilities. Countries with high sovereign debt levels are also those that are more dependent on industries hardest hit by the pandemic, such as tourism, resulting in a larger drop in corporate profits ( Chart 10 ). Chart 10 Non-financial corporate profits by sovereign indebtedness index Q4 2019 = 100 IGTA eJournal | Winter 2020/21 | 15