Debt Capital Markets Review February 2024

Despite a 0.1% uptick in December 2023, there has been a clear downward trajectory in cost of capital as inflation has fallen from a peak of 11.1% in September 2023 to 4.0% in December 2023.

As a result, the Bank of England has held base rates at 5.25% since August 2023 and Capital Economics forecasts that base rates will soften to 4.75% in 2024 and 3% in 2025.

Nevertheless, financial institutions continue to dictate the terms, scrutinising covenant headroom, challenging sensitivity scenarios and focusing on EBITDA ‘add-backs’.

Whilst it remains a ‘lenders’ market’, with many financial institutions having been cautious in deploying funds in 2023, there will be heightened pressure to put capital to use in 2024.

Leveraging the expertise of a knowledgeable debt adviser to support a quality proposal, with deep contacts in the lending community, is key to achieving a successful fundraise in this dynamic market.

To read the full report click here.

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