Interview, Fireside Chat
A Record Year In Corporate Financing
- Investment grade issuance is projected to return to a normal range of 1.3 to 1.4 trillion in 2021, despite an overall expected decline in total issuance volume from this year's peaks.
- M&A financing is forecast to recover from 5% of the investment grade market seen in 2020 to 15–20%, though large transformative deals face constraints due to regulatory hurdles for large-cap tech companies.
- Corporate capital allocation in 2021 will focus heavily on share repurchases and dividends, driven by political and regulatory variables, while companies with recent large debt-financed acquisitions prioritize meeting deleveraging goals before pursuing new debt-funded transactions.
- A near-term recovery in EBITDA levels following vaccine arrival is anticipated to accelerate the deleveraging process, with rating agency concerns expected to remain limited as the specific causes of recent EBITDA impacts are recognized.
- Corporate balance sheets will retain higher liquidity levels than minimums, and debt structuring strategies will shift from cost minimization to reducing refinancing risks to manage massive maturities in the near term.
- Risk management approaches will require more frequent preparation for 1% high-risk events, and any arising credit risks are expected to be well-telegraphed ahead of time as the market moves toward a normal operating environment in 2021.