Lenders Not Ready to Signal “All-Clear” When It Comes to the Economy, According to New FTI Consulting Survey
22 Enero 2024 - 6:30AM
FTI Consulting, Inc. (NYSE: FCN) today announced the findings of
its 2024 Leveraged Loan Market Survey, which offers insight into
bank and non-bank lenders’ perspectives on the U.S. loan industry
and highlights expectations for leveraged credit market conditions
in the year ahead.
This year’s survey found cautious optimism prevails among
lenders after a challenging year, with 45% of respondents believing
that the probability of a U.S. recession is minor compared to last
year, when only 29% had this view. Despite the surprising strength
of the U.S. economy last year in the face of monetary tightening
and high inflation, about one-third (34%) of respondents still say
there is a material probability of recession in 2024, while 8%
believe a recession is likely even as these adverse conditions
appear poised to ease.
“Last year began with a lot of pessimism about the impacts of
high inflation and monetary tightening, but it ended with many
convinced that inflation had been tamed, a recession had been
averted and earnings growth was set to resume,” said Chuck Carroll,
a Senior Managing Director and Leader of the Senior Lender Advisory
practice at FTI Consulting. “The findings in this year’s survey
point to more tempered enthusiasm, with the continuation of high
interest rates and lingering economic uncertainties lowering
respondents’ expectations for 2024.”
Real estate and REITs is the industry sector most likely to
experience distress in 2024, with 67% of respondents citing it
first, compared to 48% in 2023. Retail fell to second after holding
the top spot for the past two years, while healthcare remained in
the top three for the second year in a row.
More key findings from the survey include:
- The expected inflation outlook is improved, but still high.
Two-thirds of respondents (67%) said the inflation rate will exceed
3% by year-end, above the Fed’s target, compared to 97% who gave
this response a year ago.
- Nearly one-half (46%) of respondents believe that persistently
high interest rates despite easing inflation is the most
underestimated risk by financial markets in 2024, at least double
the rate of any other response.
- More than one-half (57%) of respondents expect recovery rates
on defaulted senior secured debt will remain below historical norms
in the year ahead, with non-bank lenders more likely to believe
this (66%) than bank lenders (53%).
- ESG considerations fell in importance to lenders, with 41% of
respondents saying that ESG factors minimally impact their lending
decisions, if at all, compared to 27% last year.
“It’s encouraging to see more optimism in this year’s survey,
but the expectation of ongoing low recovery rates likely starts to
affect behavior both before and after filings,” said Dave Katz, a
Senior Managing Director in the Senior Lender Advisory practice
within the Corporate Finance & Restructuring segment at FTI
Consulting. “It’s clear, formidable challenges remain before the
economy and markets are truly free to run.”
Survey Methodology FTI Consulting surveyed
large bank and non-bank lenders between December 7, 2023 and
December 19, 2023, including commercial banks, investment banks,
private credit platforms, CLOs and BDCs. Respondents included chief
credit officers, workout group leaders, managing directors, senior
vice presidents, executive directors, directors and vice
presidents. The survey received approximately 250 responses.
About FTI ConsultingFTI Consulting, Inc. is a
global business advisory firm dedicated to helping organizations
manage change, mitigate risk and resolve disputes: financial,
legal, operational, political & regulatory, reputational and
transactional. With more than 8,000 employees located in 31
countries, FTI Consulting professionals work closely with clients
to anticipate, illuminate and overcome complex business challenges
and make the most of opportunities. The Company generated $3.03
billion in revenues during fiscal year 2022. In certain
jurisdictions, FTI Consulting’s services are provided through
distinct legal entities that are separately capitalized and
independently managed. For more information, visit
www.fticonsulting.com.
FTI Consulting, Inc. 555 12th Street NW
Washington, DC 20004 +1.202.312.9100
Investor Contact: Mollie
Hawkes+1.617.747.1791mollie.hawkes@fticonsulting.com
Media Contact: Matthew
Bashalany+1.617.897.1545matthew.bashalany@fticonsulting.com
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