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23 April 20245 minute read

International Debt Finance Intelligence Report 2024

Adjusting to a new normal

2023 was a challenging market and it’s clear that “higher for longer” is currently the prevailing view. Interest rates may have peaked, with forward curves indicating expected rate cuts in 2024, as inflation starts to fall in many major economies. Yet significant economic headwinds remain, and the M&A value gap needs to close. 2024 is set to be the world’s biggest election year with governments of ~50% of the global population due to go to their electorate. Elections introduce uncertainty into financial markets, and therefore have the potential to impact deal activity. We could see a pre-emptive boost, or a pause, in activity as events unfold across the globe.

As debt financing terms and trends continue to evolve, our international team has looked back over the year to provide you with data-driven insights on some of the areas that have come into focus in the market.

Our International Debt Finance Intelligence Report 2024 delivers expanded content on topics including:

  • 2023 – navigating the uncertainties
  • Points of ‘interest’ in 2023
    • Financial covenants
    • PIK toggles
    • Economics
  • The agile advantage of the mid-market:
    • Public-to-private transactions
    • Net asset value financings
    • Annual recurring revenue financings
    • Venture and growth
    • Distressed opportunities
    • Asset based lending
  • How is ESG influencing the mid-market?
  • Term under the spotlight: Equity cure rights
  • Regions under the spotlight: Norway and South Africa
  • EBITDA adjustments and add-backs – have deal terms shifted?
  • Pricing protection - on the way up and on the way out
  • Sponsors - reshaping for resilience
  • Outlook and potential market trends


2023 – navigating the uncertainties

Sector focus

As expected in an uncertain environment, lenders have continued to focus on businesses in sectors that have less exposure to cyclical pressures and those that are capable of producing significant growth. Businesses with the ability to pass-through cost increases and with high cash conversion have been attractive in this market.
Market polarisation

“In France, large cap transactions have decreased sharply in 2023 and the syndicated market was almost completely closed but the mid-market held up well. There is still a strong polarity between sectors with fierce competition on quality assets in the health and tech sectors where valuations remain high even if lower than 18 months ago. The industrials sector is also very active compared to previous years.”

Sophie Lok, Partner, France

Market share movements

Despite the growing adoption of private credit, given the liquidity, flexibility and the speed of execution these solutions have to offer, in 2023 we’ve seen a shift of market share towards bank financings in some regions across Europe. We did see more activity from funds in the second half of 2023, although overall activity was down for the year.

One of the key factors that’s undoubtably contributed to this shift is the higher interest rate environment because a business can only support so much leverage/debt/cash interest.

Points of "interest" from 2023

PIK toggles

While central banks appear to have now brought an end to the cycle of rate-hikes, these rises were one of the biggest challenges affecting borrowers in 2023. A PIK toggle feature, however, enables a borrower, subject to various conditions, to elect to capitalise/compound some of the interest accruing on loans and add it to the principal outstanding, rather than paying the interest in cash.
Flexible financing

“PIK toggles have obviously been a common feature of private credit deals for some time now, but they have really come into keen focus over the past couple of years, as sponsors look to address significant increases in cash interest cost. We have generally seen private credit lenders be pretty accommodating, and willing to offer flexible solutions to allow assets (albeit good quality assets) some headroom to cash interest cost for reasonably significant periods.”

Neil Campbell, Partner, UK

How is ESG influencing the mid-market?

Momentum has been building in the mid-market around ESG. Lenders and investors continue to hardwire ESG considerations into strategies and credit processes. Mid-market corporates are also increasingly aware of the benefits of engaging with the agenda as sustainability credentials are more likely to have a bearing on their access to credit and its pricing. As a result, we are continuing to see ESG-related terms and approaches evolve and we expect the same will continue into the year ahead. 

Stress and work-outs

“We'll inevitably see an increasing number of 'the straw that breaks the camel's back' situations where an asset can no longer withstand the various pressures.”

Max Mayer, Partner, Netherlands
Corporate refinancings

“Whether or not borrowers elect to do a full refinancing or simply kick the can down the road with an amend and extend remains to be seen. It will be interesting to see how the balance of traditional bank vs private credit fund lending to corporates might shift, given the slowly recovering interest rate environment but also the political uncertainties anticipated over the course of 2024.”

Charlotte Lewis-Williams, Partner, UK
Liquidity - bridging the gap

“We expect a dual market where market participants will continue to focus on mid-market transactions and a deeper scrutiny of any prospective deal will be a must. Mezzanine financiers will likely gain back some momentum bridging liquidity gaps and, simultaneously, some work-outs and restructuring and refinancing processes will inevitably kick-off and run in parallel.”

Cesar Herrero Mazario, Partner, Spain