FTI Consulting Releases 2020 Survey of U.S. Loan Market
April 02 2020 - 7:30AM
FTI Consulting, Inc. (NYSE: FCN) today released the findings of its
2020 U.S. Loan Market Survey, which provides a glimpse into bank
and non-bank lenders’ views against the backdrop of the COVID-19
pandemic and oil market price disruptions.
According to the survey, which was conducted from Feb. 19 to
March 6, just as the pandemic was gaining hold in the United
States, 53% of bank and non-bank lenders in the U.S. market viewed
COVID-19 as an event more significant than global financial markets
were expecting, and 19% viewed it as something capable of
triggering a global recession that markets were too complacent
about.
“The hugely disruptive economic effects of COVID-19 in the U.S.
are manifest today, but it wasn’t obvious at all six weeks ago when
our survey was launched,” said Sanjeev Khemlani, a Senior Managing
Director and Leader of the Senior Lender Advisory practice within
the Corporate Finance & Restructuring segment at FTI
Consulting. “Nonetheless, a strong majority of our respondents
believed that financial markets were underappreciating the virus’
potential to inflict real damage on our economy.”
Key findings from the survey include:
- 68% of respondents believed President Trump would win
reelection.
- EBITDA adjustments have distorted real leverage metrics of many
sponsor-owned companies, with 90% of respondents believing they
have become more aggressive in recent years.
- Lenders were more willing to recapitalize and own businesses
rather than selling at depressed prices.
- Only 27% of respondents believed that demand for leveraged
loans as an asset class has peaked.
- 59% of respondents believed the Federal Reserve would cut
rates, which the Fed has since done twice as a result of the market
turmoil.
“Lenders’ responses were highly consistent compared to last year
with respect to many topics, including industries most likely to be
distressed, the demand for leveraged loans, Fed policy decisions,
and expected workout activity at their institutions,” said Mark
Laber, a Senior Managing Director in the Senior Lender Advisory
practice at FTI Consulting and lead author of
the 2020 U.S. Loan Market Survey. “One notable change
from last year was the resolution of loans in workout, where we saw
a much higher percentage of respondents cite credit bidding as the
ultimate resolution for troubled loans in their portfolio. This
change was driven by non-bank respondents and highlights a stark
contrast: While both bank and non-bank lenders reported that
business sale outcomes doubled compared to last year, non-bank
lenders had many more instances resulting in a credit bid.”
Survey MethodologyFTI Consulting surveyed more
than 100 bank and non-bank lenders across the United States and
globally between Feb. 19 and March 6, 2020. Respondents included
workout group lenders, managing directors, directors, vice
presidents, executive directors and chief credit officers. Lenders
had loan exposure ranging from less than USD$1 billion to more than
USD$25 billion.
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 5,500 employees located in 27
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 $2.35
billion in revenues during fiscal year 2019. For more information,
visit www.fticonsulting.com and connect with us on Twitter
(@FTIConsulting), Facebook and LinkedIn.
Investor Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com
Media Contact:
Matthew Bashalany
+1.617.897.1545
matthew.bashalany@fticonsulting.com
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