NOTHING ENCAPSULATES THE revolution in leveraged finance over the past couple of years more starkly than the re-emergence of the debt adviser. Who needed advice on how to raise debt in the boom years when banks were falling over themselves to lend without covenants, and CLOs and hedge funds were pumping unprecedented liquidity into the loan market? The only advice that many firms needed was how to field the deluge of solicited and unsolicited offers. Both corporates and private equity sponsors became accustomed to not having to wonder where their next loan was coming from.
The persistent lending freeze these entities are now faced with is having a traumatic impact. In March, Moody’s trailing speculative-grade corporate default rate for Europe was 2.7%. The agency predicts that this will rise to 22.5% by the year-end. Recent defaults include Sanitec, British Vita and Ferretti. That is a shocking deterioration, accelerated by the...
