Are Middle Market Companies Doing Enough to Hedge Their Interest Rate Risk?
May 19 2015 - 8:30AM
Business Wire
CIT Executive Spotlight Examines Capital
Markets 2015 Outlook
With the possibility of rising interest rates on the horizon,
middle market companies that fail to engage in any type of hedging
activity are potentially leaving themselves exposed to higher costs
of capital in the future. However, many of these companies are
comfortable taking this risk today. These are some of the
observations from Neil Wessan, Group Head and Managing Director,
CIT Capital Markets, a division of CIT Group Inc. (NYSE:CIT), a
leading provider of commercial lending and leasing services, in
“2015 Capital Markets Outlook” (www.cit.com/wessan), the latest
piece of market intelligence in the CIT Executive Insights video
series of in-depth executive Q&As.
“We think it’s a mistake for middle market companies to operate
with high amounts of exposure that could be impacted by rising
interest rates,” said Wessan. “Companies can take a prudent
approach today and avoid high costs tomorrow through a variety of
products. Doing this could help protect their loans rather than
waiting to hedge once rates have already risen.”
Some of the other Capital Market trends Wessan reflects on
include:
- Regulations Remain a Concern:
Regulations remain one of the top concerns for many middle market
companies when they inquire about lending and loans, which is
forcing total leverage and first lien leverage down.
- ACA, Taxes and Government
Intervention Pose Challenges: New regulatory issues and the
environment surrounding the Affordable Care Act, taxes and
government intervention in many new fields are presenting
challenges for many middle market companies.
- 2015 Outlook Is Positive:
Lenders that can roll up their sleeves and demonstrate their deep
industry expertise within industry verticals, such as healthcare,
should see success. Transactions that are in heavily regulated
industries that challenge current regulations will be very
expensive.
EDITOR’S NOTE:
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Middle™ (cit.com/viewfromthemiddle) and our CIT Point of View blog
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About CIT
Founded in 1908, CIT (NYSE:CIT) is a financial holding company
with more than $35 billion in financing and leasing assets. It
provides financing, leasing and advisory services principally to
middle market companies across more than 30 industries primarily in
North America, and equipment financing and leasing solutions to the
transportation industry worldwide. Its U.S. commercial bank
subsidiary, CIT Bank (Member FDIC) BankOnCIT.com, offers a variety
of savings options designed to help customers achieve their
financial goals. cit.com
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CIT MEDIA RELATIONS:C. Curtis Ritter, 973-740-5390Senior
Vice President of Corporate CommunicationsCurt.Ritter@cit.comorMatt
Klein, 973-597-2020Vice President, Media
RelationsMatt.Klein@cit.comorCIT INVESTOR RELATIONS:Barbara
Callahan, 973-740-5058Senior Vice
PresidentBarbara.Callahan@cit.com
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