Capital Markets’ Restructuring in 2020

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As institutions continue to seek ways in which to battle the combined pressures of increasing competition plus P&L and shareholder expectations, the new macro-economic impacts of coronavirus (“COVID-19”) mean that the number of restructures across the capital markets  is rapidly increasing.

Bloomberg stated that COVID-19 has left investors “rushing to set up financial lifelines for their European holdings, providing emergency loans or buying debt back from the companies they own. In some cases, firms are asking their limited partners for funds to plug liquidity shortfalls — money that should have been deployed for deals.” Source

Our Head of Capital Markets, Paul Wilden, adds:

“The cycle from boom to bust is on average every seven years, the last major downturn and correction was the global financial crisis, there was certainly an uptick in talk at trade conferences towards the end of 2019 around a looming recession – so the expectation prior to COVID-19 was that this was already a likely scenario. COVID-19 has now acted as a catalyst for something that many in the markets had been already anticipating, albeit not priced-in.

‘Volatility’ and ‘dislocation’ are buzzwords associated with downturns. The current situation and dynamic is unique and the first truly global event in the digital age. Cross-jurisdictional connectivity in a digital world, which ultimately allows for the transfer of goods and cash in a timely and efficient way, has to some extent acted as a domino effect for the markets from Asia to the USA. The stress created and the economic impact of COVID-19 means that it is highly likely we will see a significant uptick in restructurings. This trends will see broad cross-sections of the financial markets shift their focus to supporting restructurings which either nurse a company back to health and protect investors, or help preferential creditors and creditors alike recover some of their investment. These events test the value and robustness of the documentation and are often learning opportunities for improving the market, providing improved transparency and strengthening the products and how they work.”

Whether raising new debt, re-financing existing debt, working through an insolvency, dealing with conflicts, or simply streamlining corporate structures to reduce existing costs, it is important that any service delivered to support this strategy is tailored to the unique requirements of the situation, regardless of whether the activity is financially or operationally driven.

We are able to deliver a single-source solution to clients and partners supporting Capital Markets clients through both performing and non-performing debt and debt structures. From Corporate Bonds to Syndicated and Bilateral loans we have the in-house knowledge and experience to support clients from either an issuer / lender perspective, an investor perspective, as a noteholder or lender, via a syndicated loan or on a bilateral basis.

We can act as independent agent, SPV administrator and deliver Note/Security Trustee services on a successor and/or new issue basis. With a solid understanding of the challenges of events of default and debt restructurings our capabilities span 14 markets for SPV services that can be used to support refinancing or replacing an existing provider. A seasoned project team ensure end-to-end continuity of service during the transition, mitigating against any risk, and boasting extensive SPV successor experience.

When there is a need to post and/or manage cash/assets during a restructure, we can support you too through our Escrow, Banking and Custody solutions.

  • Escrows can be open in 48 hours using a short standard agreement
  • Bank accounts can be opened in 5 days through our European Depositary Bank, a Luxembourg entity in existence for over 45 years
  • Custody accounts can be opened rapidly via our global network using best in breed technology

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