Refinancing 2011
Europe’s wall of maturing debt was repeatedly flagged by market participants in recent months. Vintage 2005 through 2007 top-of-the market deals with aggressive leverage, low interest costs and wide lending syndicates face substantial debt maturities from 2012. For many issuers, 2011 is the year to kick-start refinancing plans.
Debtwire’s 2011 Refinancing Report, in association with Roland Berger Strategy Consultants, Freshfields Bruckhaus Deringer and Rothschild, surveyed market respondents from the borrower and lender communities. The report findings highlight contrasting views from the two camps as well as market expectations in refinancing negotiations.
Borrower respondents have implicit confidence in the market’s ability to absorb the upcoming maturity spike. A large single block of borrowers anticipate optimum refinancing conditions in 2012, and relatively few plan to refinance materially ahead of time. By contrast, lenders held a more conservative view, anticipating refinancing to start in earnest in 2011 ahead of its peak in 2012.
While expectations regarding the size of the upcoming maturity wave varied markedly, a significant share of borrower respondents anticipate volumes significantly below estimates published by market participants, giving one potential reason for the lack of apprehension from borrower respondents.
Borrowers also had high hopes regarding potential shifts in creditor dynamics, anticipating a much higher response rate from investors' rolling exposure to meet borrowers’ financing needs. In contrast, lenders anticipate more changes to the investor base in a refinancing, with many expecting bonds to shoulder more of the debt burden in new deals.
The results suggest borrowers could fall short of factoring in the true extent of bank deleveraging and risk reduction ahead of new Basel III capital requirements.
Despite their seemingly leisurely approach to refinancing, borrowers cited timing as the key challenge. Lenders were much more concerned with covenant pressures, citing the financial or incurrence-based tests as a critical challenge in refinancing negotiations.
Key findings from the report include:
> 59% of borrowers said that approaching maturities is their primary reason to refinance
> The UK, Spain and Germany are named as the countries which will account for the bulk of refinancing
> Timing and covenant pressures will pose the biggest challenges to refinancing
> Limited liquidity is considered to be the biggest concern regarding the ‘refinancing wall’. 32% of borrowers stating it as a primary concern, and 24% stating it as a secondary concern.
The full report is available via the link to the right.
Debtwire’s 2011 Refinancing Report, in association with Roland Berger Strategy Consultants, Freshfields Bruckhaus Deringer and Rothschild, surveyed market respondents from the borrower and lender communities. The report findings highlight contrasting views from the two camps as well as market expectations in refinancing negotiations.
Borrower respondents have implicit confidence in the market’s ability to absorb the upcoming maturity spike. A large single block of borrowers anticipate optimum refinancing conditions in 2012, and relatively few plan to refinance materially ahead of time. By contrast, lenders held a more conservative view, anticipating refinancing to start in earnest in 2011 ahead of its peak in 2012.
While expectations regarding the size of the upcoming maturity wave varied markedly, a significant share of borrower respondents anticipate volumes significantly below estimates published by market participants, giving one potential reason for the lack of apprehension from borrower respondents.
Borrowers also had high hopes regarding potential shifts in creditor dynamics, anticipating a much higher response rate from investors' rolling exposure to meet borrowers’ financing needs. In contrast, lenders anticipate more changes to the investor base in a refinancing, with many expecting bonds to shoulder more of the debt burden in new deals.
The results suggest borrowers could fall short of factoring in the true extent of bank deleveraging and risk reduction ahead of new Basel III capital requirements.
Despite their seemingly leisurely approach to refinancing, borrowers cited timing as the key challenge. Lenders were much more concerned with covenant pressures, citing the financial or incurrence-based tests as a critical challenge in refinancing negotiations.
Key findings from the report include:
> 59% of borrowers said that approaching maturities is their primary reason to refinance
> The UK, Spain and Germany are named as the countries which will account for the bulk of refinancing
> Timing and covenant pressures will pose the biggest challenges to refinancing
> Limited liquidity is considered to be the biggest concern regarding the ‘refinancing wall’. 32% of borrowers stating it as a primary concern, and 24% stating it as a secondary concern.
The full report is available via the link to the right.
