Chief Financial Officers across non-financial corporate sectors are adjusting capital structures as the era of ultra-low interest rates recedes. A substantial wall of corporate debt is set to mature over the next 18 months, forcing re-issuance at significantly higher coupon rates.
Margin Compression Pressures
Companies operating with high debt-to-equity ratios are seeing debt servicing costs consume a larger share of operating cash flow. In response, executive teams are instituting cost-containment measures, including hiring freezes and deferred capital expenditure.
Private Credit Market Expansion
As traditional commercial banks tighten lending standards, private credit funds are filling the liquidity gap. However, the higher cost of private capital is compelling borrowers to accept stricter covenant terms to secure financing.