Restructuring

We recently asked our esteemed readership what the prognosis was for The Great Wall Looming Over Wall Street in 2014 and beyond.  Specifically, we wanted to know whether our readers thought the refinancing of the $657 billion in upcoming high-yield bond, leveraged loan and commercial mortgages expected to come due in 2014 will be possible.
The results make for interesting reading.  Fully 20.8% of our readers who responded to the survey thought that the debt wall was insurmountable! Pessimists abound!  Such a view would imply that the U.S. corporate default rate will return to its baseline of 4.2% (from 1985 to 2010) from its 2011 low of 0.088% sooner rather than later.
A healthy 50.6% of respondents thought that businesses facing a refinancing in two to three years’ time would be able to tackle it with a grappling hook and a financial guide.  This view tends to imply a higher level of defaults than we are currently seeing, but essentially follows recent trends in economic and financial data that show existing maturities being chipped away at, and additional liquidity coming on-line in time for the expected refinancing bonanza by way of new CLOs and other financing means…or perhaps this is just a statistic that shows that restructuring professionals reading our blog are an optimistic bunch!
Lastly, 28.6% of respondents indicated that they’ll be spending the summer reading The Big Short and catching up on their BFR Blog reading in their deckchair by the beach.  For these readers, our professional recommendation is SPF 50 and a panama hat.
Only time will tell where we will come out.  As for the BFR Blog team, we’ll keep our ears to the ground and will report any changes in market temperature.
Have a great week!