Debt Advisory 2023 Lender Survey
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The UK debt markets were not immune to the global challenges experienced in 2022, with many factors having direct and indirect impacts on lenders of all types.
Clearwater International’s Debt Advisory team surveyed over 55 lenders operating in the UK leveraged finance market
In particular, the movement in interest rates and inflation meant that there were changes to certain terms, and behaviour that had previously been well established.
As one of the largest independent advisers, Clearwater International’s Debt Advisory team surveyed over 55 lenders operating in the UK leveraged finance market, to determine what these recent changes mean for borrowers in 2023.
The lenders surveyed were spread across banks and debt funds, covering a range of transaction sizes and multiple regions, therefore providing a comprehensive view of the UK leveraged market.
Key highlights included:
- 60% of respondents reported a reduction in leverage appetite of at least 0.5x EBITDA over the last six months
- Over the last six months, margins have increased by at least 25bps for c.80% of lenders, but arrangement fees have largely remained unchanged for 57% of lenders
- Hedging still does not remain compulsory for 74% of lenders in today’s higher interest rate environment
- 40% of debt funds have increased their focus on the secondary market from six months ago
- The number of covenants per deal has remained unchanged at two or more for 80% of banks. Over 80% of debt funds are unchanged at one or two covenants
