2. CFOs will need to explore alternative channels to raise capital
Going forward, CFOs and issuers will need to think more widely about which markets they access to source capital.
In the last rate rising cycle between 2004 and 2007 we saw a significant increase in the volumes issued in the US convertible bond market.
We are seeing a similar uptick in volumes in the European convertible bond market and we expect that trend to continue.
Another market where we anticipate significant growth in 2023 is the private credit market or direct lending market where AUM are estimated to be at $427bn by the end of 2023, an uptick of 19% in just two years.
Deals in this market will come at or wider than the public market leverage finance equivalent levels. They’ll have tighter covenants, but they’ll be at lower multiple levels than we have seen in recent times.