Welcome to the results of our annual Corporate Debt and Treasury Report gauging trends in the corporate debt markets in 2017.
Key conclusions include:
- Businesses remain confident despite the challenges posed by Brexit and there is a more optimistic long term outlook than might initially have been expected. To date there have been no knee-jerk reactions by corporates in relation to Brexit. In fact, year on year increases in spending is focussed on acquisitions.
- Whilst there are a number of macro-economic and political headwinds, none are seen as precluding the efficient raising of debt currently although regulatory uncertainty and Brexit could change that.
- The weight of bank debt refinancings seen in 2015 plus the threat of Brexit to cross-border lending may result in a debt financing spike in late 2018/early 2019 as a potential funding gap appears in the bank lending market. This is likely to drive greater debt diversification, particularly into the US private placement market.
- The price of debt is likely to rise in the short to medium term. That is primarily expected to be due to increased credit margins or credit spreads although higher bank funding costs, increasing US base rates and FX will all play a role.
- There is evidence that banks are deploying capital far more carefully as they continue to evolve rapidly and that they are retrenching from relationships where the returns do not meet their hurdles.
We hope you find these results informative and would like to thank those who participated in our survey. If you have any feedback on the survey or its results, we would be very happy to receive it.
Download the full report above.
The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2018