KPMG survey: Refinancings drive credit market

Almost two thirds of executives surveyed by KPMG believed debt markets would continue to improve into next year.

Financial executives who responded to a KPMG debt market survey thought refinancings and repricings would continue to drive activity through to the end of the year.  

Approximately 500 executives responded to the survey, of which 57 percent maintained that refinancings would provide the largest boon for credit markets through the end of the year. Another 18 percent of respondents said the same about corporate M&A activity.  

KPMG’s co-heads of capital advisory, Ray Kane and Joe Rodgers, could not be reached for comment at press time. 

The respondents were much more divided with regard to how recent regulatory actions might influence the banking industry and credit markets going forward. Many banks have indicated that the US Federal Reserve and Federal Deposit Insurance Corporation’s adoption of Basel III and strict capital requirements will lead to a spike in lending costs. The respondents tended to agree – 42 percent said that they expect the cost of raising capital to increase a move capital flows overseas – however, 46 percent expected little to no change.  

Responses were very mixed regarding the hot leveraged loan market, which has undergone something of a boom since the survey was undertaken in late May. It found 34 percent of respondents said rising rates – either as a result of US regulatory action or a strengthening economy – would have the largest impact on leveraged loans. Another 27 percent attributed effects to capital providers driving yields lower and 24 percent said low default rates.  

Overall, 63 percent of respondents indicated that they thought the credit marketswould continue to improve, and only 7 percent said their businesses would be unable to access credit.