1、Navigating European distressed marketsEuropean debt sales report 2022Portfolio Solutions Group November 2022KPMG International|Domenico Torini EMA Portfolio Solutions Group Co-Head Partner,KPMG in ItalyCarlos Rubi Montes EMA Portfolio Solutions Group Co-Head Partner,KPMG in Spain1 EC Economic Foreca

2、st(Spring 2022)The deterioration in asset quality due to COVID-19 has not been as strong as anticipated.This is largely due to the successful economic support measures put in place at the national and EU levels.On the other hand,macroeconomic developments increasing tensions at the EU border,rising

3、inflation and the persistent risk of new waves of COVID-19 are looming over the anticipated recovery for 20222023.The forecasts for the years ahead,which were made in the first quarter of 2022,projected strong growth across the Union as COVID-19 support measures largely remained in place albeit most

4、 Member States are gradually winding down these programs and the availability of additional funding through the Next Generation EU(NGEU)credit facility.However,the geopolitical tensions unfolding in Ukraine will first impact EU countries due to the countrys close proximity to the Union and its stron

5、g economic relationships to the region.Therefore,the previously anticipated growth has been revised downward across the continent,particularly in countries with stronger reliance on imported fossil fuels.For reference,the previously expected GDP growth rate within the EU had been estimated at 4.0;pe

6、rcent,this has now been revised to 2.7 percent.1This uncertain outlook poses a threat to banks asset quality,and it will drive more conservative assumptions of default and danger rates in the short and medium term.Already banks,on average,have increased coverage ratios due to COVID-19 risks.KPMG exp