Distressed debt and defaults have the potential to rise through 2023 as companies struggle to meet their liabilities. As default risk rises, so too will loan restructuring activity, as lenders and borrowers alike take steps to ease the burden.
This report, based on a survey of distressed investors, hedge funds, investment bankers, and direct lenders, looks to understand how lenders and borrowers can best position themselves for the uncertainty that lies ahead.
Highlights include:
- 28% of respondents believe a wave of restructuring activity in the next 12 months is likely, while 34% say it is very likely.
- 44% see the rising interest rate environment as the top driver for loan restructuring activity in the year ahead, while 35% extend this out to monetary policy tightening as a whole—a broader concept encompassing both interest rates and the Fed running assets off its balance sheet.
- 34% of respondents believe private equity will emerge as a primary funding source over the next 12 months.
