Debt Capital Markets – Gambit Review Summer 2024

Cost of capital has trended downwards over the last 18 months, with inflation falling from a peak of 11.1% in October 2022 to the target level of 2% in May 2024.

The Bank of England has held the base rate at 5.25% since August 2023 and Capital Economics forecasts that rate cuts are anticipated in the second half of 2024, with rates further softening to 3% in 2025.

Nevertheless, financial institutions continue to have significant influence over terms, scrutinising covenant headroom, rigorously testing sensitivity scenarios and concentrating on EBITDA ‘add-backs’.

In this current climate as the debt markets continue to re-open for borrowers, 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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