Debt market update Q3 2009

Credit where credit's due?
The latest Debt Market Update from the Debt Advisory team at PricewaterhouseCoopers discusses recent and expected trends in key credit markets.

Whilst credit markets have improved since the beginning of the year, borrowers continue to find raising or extending existing credit lines challenging. One of the big stories of the year has been the bond market and we have seen an increase in the number of client enquiries concerning credit ratings and bond issues. This has continued throughout the year as banks remain cautious and often reluctant to advance loans to new customers. However, during the third quarter, upward pricing pressure on bank lending has abated. Although we have yet to see significant falls in bank pricing, in the absence of further major economic shocks, the peak for pricing may now have passed.

Summary findings

• Corporate Lending - a focus on existing customers but cautiously open for new business
• Leveraged Finance - difficult for the remainder of the year but innovative thinking means deals are possible
• Corporate Bonds - an increase in activity and risk appetite
• Convertible Bonds - a significant increase in issuance of this cheaper, more stable form of debt financing
• Asset Based Lending - remains well positioned to capitalise on lack of credit from traditional sources
• Restructuring - expect a substantial re-pricing of facilities