Debt financing in a tight market
Infrastructure and energy issuers did not escape a global surge in interest rates over the past year. Debt financing has become more expensive and less available as lenders become much more selective on what deals they will finance. Big deals are still getting done, though, as shown with Brookfield’s USD 14bn term loan financing for a joint venture with Intel.
Volumes in the bonds market have been the lowest of the past five years, marking a visible trend. In the loan market, on the other hand, dealmaking values have increased heavily, despite a lower amount of transactions. Lenders are therefore looking into new forms of funding. In the US renewable space, for example, it’s clear how tax equity bridge loans figures are tremendously on the rise – as well as tax equity financing - and becoming part of the funding packages for greenfield projects.
- How are investors securing debt financing in a much tighter market?
- What leverage multiples are available for M&A deals? Will the bank market reopen?
- 2022 saw a few notable bankruptcies, including Talen Energy and Compute North. Are more restructurings in store for 2023?
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