Financing Year in Review: Evolving Markets and New Trends
Widely held concerns about inflation, rising interest rates, and a possible recession combined to slow debt financing and deal activity in the first half of 2023. Borrowers deferred new debt deals, delayed planned refinancings, and paused major corporate transactions while waiting for interest rates to top out. Private equity sponsors, in particular, held back on […]
Gregory Pessin and John Sobolewski are Partners, and Alana Thyng is a Law Clerk at Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton memorandum by Mr. Pessin, Mr. Sobolewski, Ms. Thyng, Josh Feltman, Emily Johnson, and Joel Simwinga.
Widely held concerns about inflation, rising interest rates, and a possible recession combined to slow debt financing and deal activity in the first half of 2023. Borrowers deferred new debt deals, delayed planned refinancings, and paused major corporate transactions while waiting for interest rates to top out. Private equity sponsors, in particular, held back on debt-financed leveraged buyouts while watching to see whether interest rates (or business valuations) would fall. Direct lending remained hot, continuing to fill in market gaps. But it was by no means a borrower’s market, whether in terms of pricing, terms, or leverage multiples.
