The global financing markets are headed for a revival over the next 12 months, with a slower recovery expected in Europe, according to a survey of capital providers conducted by 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 over 125 capital providers in North America, Europe and Asia, including 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 per cent) expect lending activity to increase in China, Korea and Japan, and 68 per cent of respondents predict the same for the US. 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 per cent) and European respondents (70 per cent) report an increased appetite for structured finance and securitisation. Only 42 per cent 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 US financial crisis. North American respondents are not necessarily risk-averse, however, as 56 per cent 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 per cent) and sovereign wealth funds (45 per cent), 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.
John Hilson, chair of the finance and restructuring practice, says: “New opportunities still exist. History shows that successful operators have emerged in even the least promising of markets.”