Financing

When COVID-19 closed the IPO window at the start of last year, expectations were bleak. But the market fought back and 2020 ended on a high.

The European leveraged finance market remains resilient following a year of unprecedented hardship, as lenders dissect credits to determine the best possible deals, from business fundamentals to pricing and documentary terms

Opportunities in uncertain times  

Despite encouraging signs that economies could reopen as COVID-19 vaccinations are rolled out, additional waves of infections and extended travel restrictions weigh heavily on the leisure and hospitality industry

Commercial chapter 11 filings in the US increased significantly in 2020, but government stimulus measures and widespread availability of fresh capital resulted in fewer corporate restructurings than many anticipated—that could change in the next 12 months

Record SPAC issuance is expected to boost M&A activity, supporting additional leveraged finance issuance, while financial sponsors take advantage of the opportunity to exit existing investments.

COVID-19 disruption and tension between the US and China saw loan and high yield bond issuance decline across Asia-Pacific in 2020, and borrowers and lenders remain cautious

General partner-led fund restructurings accounted for the majority of private equity secondaries volume in 2020 as managers sought liquidity in a flat exit market

In 2020, after a volatile first half, US leveraged finance markets experienced a strong second half and are well-positioned for 2021.

We highlight the key European M&A trends in the second half of 2020, and provide our insights into the outlook for M&A moving forward.

The European leveraged finance market remains resilient after a year of unprecedented hardship, as lenders dissect credits to determine the best possible deals, from pricing to documentary terms

Leveraged buyout high yield bond and leveraged loan issuance fell in Q3 2020 as a lack of buyout deals in a still cautious M&A market dampened appetite for financing

Lockdowns and market volatility have put companies across the board under financial pressure and forced many leveraged finance borrowers into restructurings

Mining companies entered 2020 in good financial shape and have continued to secure finance despite disruption from COVID-19

The use of net asset value finance by private equity firms has spiked under COVID-19 as managers explore new sources of liquidity in a weak M&A market

Refinancing activity has proven an attractive option amid COVID-19 disruption, with borrowers in good standing seeking to extend maturities and take advantage of low interest rates

Chinese real estate lenders lift APAC high yield bond issuance after an active Q3

COVID-19 split the retail financing market—players of scale with online capabilities thrived, while retailers reliant on brick-and-mortar stores for the bulk of their earnings came under increasing financial pressure

Dividend recapitalization activity plunged in the immediate aftermath of COVID-19 but, as markets recovered, investor appetite for recap deals swelled

The oil and gas sector has been one of the hardest hit by COVID-19 lockdowns and there has been little relief as restructurings rise across the industry

After taking a deep dive in Q2, US leveraged loan issuance picked up in Q3, while European markets gained year on year

Although US high yield bond issuance cooled somewhat in Q3 2020, it still hit record highs, while European activity remained on an upward trend

The UK's new Corporate Insolvency and Governance Act introduces a restructuring plan procedure that enhances the flexibility of the English scheme of arrangement

Africa in the coronavirus era

Although COVID-19 lockdowns have seen high-profile companies lose their investment grade status, lenders have continued to support these credits

The decline in H1 2020 leveraged finance issuance has seen some lenders intensify their focus on pricing and borrower-friendly loan structures, but lender responses to the impact of COVID-19 have diverged across regions

Leveraged finance defaults are rising as the impact of COVID-19 is felt, but covenant-lite terms, government intervention and support from financial sponsors have mitigated fallout from the pandemic

After COVID-19 concerns brought issuance to a near halt in March, Q2 high yield bond activity climbed in most markets as borrowers sought to boost balance sheets and cash reserves

Latin American loan issuance has felt the effects of COVID-19 disruptions, but lenders have remained open for business as borrowers turn to bilateral loan revolving credit facilities for liquidity

Growing investor appetite for financial products with a positive impact, coupled with a demand for recovery capital post-COVID-19, have lifted the market for social bonds

The disruption to capital markets caused by the COVID-19 pandemic has not shifted the overall timeline of regulators and industry bodies for the replacement of US dollar LIBOR with SOFR by the end of 2021

Investor sentiment has begun to recover, but ratings downgrades and higher pricing continue to keep loan markets on alert

We highlight the key European M&A trends in the first half of 2020, and provide our insights into the outlook for M&A moving forward.

Low prices and excess supply have pushed oil & gas balance sheets to the brink, which means raising traditional debt will remain difficult and restructurings are expected

Remote working, online shopping and telemedicine have shielded the technology sector from the worst effects of COVID-19 lockdowns

COVID-19 has pushed healthcare systems around the world to the limit, but depending on the vertical, certain companies have been less affected than those in other sectors—and the availability of credit to battle the pandemic has helped

Even though COVID-19 has taken a toll on consumer spending and supply chains, the food and beverage industry has shown resilience and continues to tap credit markets

The COVID-19 lockdown forced restaurants, hotels, gyms, theaters and casinos to shut their doors and put balance sheets under extreme strain, but some have tapped debt markets to see them through

Retailers faced a difficult financing market before COVID-19 appeared, but lockdowns have made the situation even tougher

Underwriters are grappling with the need to support clients that are accessing funding, while maintaining disclosure standards and managing their risk when the tools they’ve typically used may be unavailable