New York, NY (November 18, 2010) The global financing markets are headed for a revival over the next 12 months, with a slower recovery expected in Europe, according to a comprehensive survey of capital providers conducted by leading global law firm Paul, Hastings, Janofsky & Walker in association with mergermarket and Debtwire. The survey revealed that increased lending activity, heightened competition from non-traditional lenders and new financing structures are driving renewed optimism in the global financing markets.
Based on a series of interviews with more than 125 capital providers in North America, Europe and Asia, including leading international banks, private equity firms, hedge funds and sovereign wealth funds, The Future of Finance: Accessing Capital in a New Global Economy
identifies emerging trends in the global and regional financing markets and captures the opinions, concerns and overall sentiment of its most active players.
Respondents outlook for global lending activity over the next 12 months is largely optimistic. The overwhelming majority of respondents (76%) expect lending activity to increase in China, Korea and Japan, and 68% of respondents predict the same for the U.S. The forecast is gloomier for Western Europe, however, where less than half of total respondents expect lending to increase.
Looking at specific financing structures, a significant majority of Asian respondents (81%) and European respondents (70%) report an increased appetite for structured finance and securitization. Only 42% of North American respondents are seeing an increased appetite for these structures, which may reflect the perceived risk attached to complex financial instruments in the wake of the U.S. financial crisis. North American respondents are not necessarily risk-averse, however, as 56% report an increased appetite for high yield finance.
Survey results also suggest the financing market will feature new players going forward. Respondents expect non-bank capital providers, particularly private equity firms (84%) and sovereign wealth funds (45%), to become increasingly active competitors in the global financing markets over the next 12 months. In addition, Asian banks are seen to be emerging as increasingly active competitors for both corporate lending and bond issues.
Additional findings of the survey include:
• The majority of both North American (58%) and European (54%) respondents report that a conservative capital raising climate has triggered a change in financing structures.
• Respondents in Europe and North America are considerably more likely than those in Asia to say that capital adequacy requirements will affect the lending environment going forward and expect capital adequacy requirements will lead to new financing structures.
• More than half of North American respondents, compared to just one-third of European respondents and one-fifth of respondents in Asia, believe existing and proposed regulations contradict their governments push to increase bank lending.
• Lenders are generally expected to gravitate toward non-cyclical industries. The majority of respondents (60%) expect the energy sector to be most attractive to lenders.
In addition to the above findings, this survey draws from individual respondents commentary to provide insight into the unique challenges facing lenders today. Survey results reveal that despite economic volatility, capital providers are optimistic about the future of financing. As John Hilson, chair of the Finance and Restructuring practice, explains, New opportunities still exist. History shows that successful operators have emerged in even the least promising of markets.
for the full survey.
About Paul Hastings
Paul, Hastings, Janofsky & Walker is a leading global law firm with offices in Asia, Europe, and the United States. We provide innovative legal solutions to financial institutions and Fortune 500 companies. Please visit www.paulhastings.com
for more information.
About mergermarket and Debtwire
mergermarket is an unparalleled, independent Mergers & Acquisitions (M&A) proprietary intelligence tool. Unlike any other service of its kind, mergermarket provides a complete overview of the M&A market by offering both a forward-looking intelligence database and an historical deals database, achieving real revenues for mergermarket clients.
Debtwire publishes real-time news and data on high yield, distressed debt, leveraged finance, and restructuring situations globally through its own network of financial journalists and analysts. We complement this coverage with a comprehensive restructuring deals database, targeted company profiles, and alerts to keep you ahead of the market. To find out more please visit www.debtwire.com.