European Leveraged Finance Client Alert Series: February 2021

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.

Financial institutions M&A sector trends: banks — H2 2020 and outlook for 2021

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

After years of warnings about maturity walls, impending cliff edges, downturns and interest rate hikes that failed to emerge, COVID-19 was the event that brought everything to a temporary standstill—but there's every chance that the markets will explode with activity in the months ahead

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

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

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

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

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

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 law will make German financial markets more competitive, allowing issuers and investors to benefit from efficiencies and lower transaction costs.

On the end of LIBOR: The end of 2021 will mark a milestone in global financial markets when regulators, in effect, phase out the "LIBOR benchmark" that underpins much of the global financial system

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

What next for Taiwanese banks and businesses?

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