Refinancing 2011: The scramble to refinance European debt

2011

Over the course of the last year, we have seen a steady improvement in debt market conditions - banks' lending appetite has improved and investor demand has been particularly strong in the corporate bond, high yield and private placement markets. This liquidity has enabled a number of corporate and leveraged borrowers to secure their funding requirements and extend maturity profiles.

However, the markets are selective and this liquidity has not been accessible to all borrowers. Those companies that are over-leveraged, underperforming or in difficult sectors are finding little appetite from credit providers and, in some cases, upcoming maturities will trigger restructuring.

Events following the recent disaster in Japan have further shaken markets, combining with sovereign risk concerns, instability in the middle-east and rising oil prices to trigger a period of significant market volatility. In these circumstances, more than ever, successful refinancing depends on developing the right strategy - thorough assessment of the available options, careful timing of any approach to the market, selection of capital providers that are likely to deliver and active management of the process to maintain momentum through to completion.

Against this backdrop of global economic uncertainty and with significant volumes of European debt maturing over the next two to three years, the 2011 Refinancing Report provides some interesting insights into how both borrowers and lenders are thinking about market timing, sources of funding and the key challenges they expect to face.