The importance of having an optimal credit profile may seem obvious but also like a daunting task. You may not know when you will need access to credit but having an optimal credit profile at all times allows you to access credit when it is needed, even unexpectedly, according to a Forbes.com article.

In business, we plan, forecast, and develop projections. Sometimes those plans do not happen exactly how we predicted. In those instances, it might be necessary to evaluate options you had not thought of earlier. Additionally, having an optimal credit profile fosters good business relationships. These relationships can help negotiate better loan rates or with integral suppliers in your supply chain. Negotiating a new bank loan, syndicated loans or club deals, are examples where having a good business relationship could allow the pool of lenders to be redefined while the borrower reassesses existing bank relationships.

Deciding what the optimal credit profile looks like for your business is specific to you and will change over time. There are tradeoffs companies have to make when they decide whether to raise debt or equity. Managers will balance the two in an effort to try and find the optimal capital structure. According to the corporate finance institute, there are a few options a company could utilize to optimize their capital structure by changing the mix of debt and equity. These options can include issuing debt and repurchasing equity, issuing debt and paying a large dividend to equity investors, or issuing equity to repay debt. These options may seem obvious now but will they seem as obvious when an unexpected event occurs?

With markets changing frequently, it is important to have a trusted advisor who specializes in debt structure advisory. Redbridge’s goal is to help financial managers make highly strategic decisions in total transparency and with a full understanding of the markets. Our approach is case-by-case and the scope of any engagement is always defined in advance with each client. While the scope of our engagements can be as broad as necessary, they can cover:

  • Analyze your company’s fundamental financials and its financing needs
  • Discover your company’s credit risk positioning strategy with banks, rating agencies and investors
  • Assess current bank relationships using a proprietary methodology to calculate risk-adjusted yield on equity
  • Identify potential financing solutions, prioritized by relevancy based on the criteria of your financial team
  • Present final recommendations for your optimal financing strategy

We have experts based in Europe and in North America who are well-versed on the issues facing corporations today including acquisition financing, commodity trade finance, CAPEX, refinancing, and amend and extend. Contact us to start the conversation.

Receive our publications