Gambit Corporate Finance LLP’s Debt Capital Markets Review for June 2025 examines the latest developments in the debt markets, providing insight and analysis into the current lending landscape.
Inflation fell from 8.7% in April 2023 to 1.7% in September 2024, before ticking up to 3.4% in May 2025.
The Bank of England base rate has reduced from 5.25% in July 2024 to 4.25% in May 2025. Capital Economics forecasts a bank rate of 3.5% and inflation falling back to 2.0% by 2026.
Despite geopolitical uncertainty and US tariffs dynamics, lending appetite in the UK continues to improve. We are seeing positive signs, including:
- Lending to large businesses increased
- Lending to SMEs continued its recovery
- Strategic and financial-sponsor activity increased
- The cost of funding nearing the lowest level in three years
- Average pricing spreads have tightened and leverage multiples increased
As credit markets continue to transition to a more borrower-friendly environment, it is essential to leverage the expertise of experienced corporate finance advisors to be well-prepared for discussions with financial institutions.
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