Why should a company issue on the debt market?
Key issues – Debt Market
Since the 2008 financial crisis, regulatory changes have been introduced to facilitate investment by institutional investors (i.e. insurance companies, pensions, funds, etc.) in mid-sized industrial companies. This has increased the range and diversity of debt instruments available.
Markets are now able to respond to broader financing needs in terms of deal size, maturity, and financial flexibility. Access to primary market financing sources is particularly relevant for companies with a significant amount of debt. The optimal level of disintermediation depends on several factors, including:
- the company’s credit profile
- changes in the company’s financing needs
- market trends and opportunities
Key issues – Syndicated loans & club deals
Due to major transformations in the banking sector, companies need to redefine their refinancing strategy and reassess their banking relationships. In general, a CFO should look to refinance twelve months before the contractually defined maturity date of the syndicated loan. However, there are several reasons a company may want to push this initial timeline forward, such as:
- to take advantage of favorable market conditions
- to anticipate changes in external credit ratings
- to substantially modify the terms of the existing syndicated loan, for which a simple amendment would not suffice
When approaching banks, the negotiation strategy must be based on an in-depth analysis of existing banking relationships, market dynamics, and the company’s financing needs.
How Redbridge can help you?
Redbridge’s approach marks a shift away from the market assumption that terms and conditions of a transaction are fixed by lenders.
Debt Market – Our debt advisory team has an in-depth knowledge of market dynamics, rating agencies’ methodologies, and investor preferences. Redbridge equips CFO’s with the best tools and most relevant information to identify optimal disintermediation strategies.
- credit positioning strategy
- rating advisory
- presentations for agencies
- selection of investors (private placements) and/or bookrunners (public bonds)
- definition of term sheets and participation in the negotiation of legal documents
Syndicated loans & Club deals – Over the last fifteen years, Redbridge DTA has assisted nearly 65 companies in the execution of various types of refinancing projects including syndicated loans, club deals and amend-&-extend transactions.
Redbridge does not negotiate on behalf of its clients, but applies its benchmarking process in successive stages. Our rigorous and transparent approach gives the client total control over the process and minimizes project risk while still ensuring stakeholders’ involvement.
- identifying financing and liquidity needs
- setting up a negotiation framework based on each company’s priorities
- developing a bilateral approach with each potential lender
- assessing initial offers and defining the key terms of the transaction
- negotiating the detailed terms and conditions prior to determining each bank’s role and responsibilities
- selecting participants once the terms and conditions have been validated by the credit committee
- drafting and negotiating the term sheet