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Reorg Radio
The Reorg Primary View: Interest Rates, Restructuring, Middle Market and Private Credit
Feb 13, 2023
13:47
Snipd AI
This episode of The Reorg Primary View covers a range of interesting topics including the impact of Federal Reserve rate hikes, expectations for restructuring activity, differences between middle market and larger cap market in private credit, and proactive measures for private equity sponsors. Ajay Bijoor also shares his support for the Philadelphia Eagles and the best cheesesteaks in Philadelphia.
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Quick takeaways
- Higher interest rates are limiting companies' ability to invest, leading to increased restructuring activity.
- Restructuring in the middle market involves nuanced deal structures and increased use of direct lending.
Deep dives
Impact of Rate Hikes on Restructuring Market
The Federal Reserve's consistent rate hikes and significant increases in rates have led to a higher cash interest burden for companies, limiting their ability to invest in operations and capital improvements. As a result, businesses with tightening liquidity need to be proactive in making decisions and allocating capital. This is expected to lead to a pickup in restructuring activity in the distress market through 2023 and 2024, with companies in sectors like retail and healthcare facing more signs of distress.
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