So far this year, asset-based lending (ABL) has been one for the record books — although the accompanying enthusiasm has been fairly muted. Looking forward to Q4/11 and into 2012, prospects for deal flow are in a bit of a fogbank in terms of where new deals will come from. And while it’s been a good year for ABL in terms of issuance, the rest of the year is unclear.
In July 2011, the Federal Reserve Board conducted a Senior Loan Officer Opinion Survey on bank lending practices over the past three months. Lenders from 55 U.S. banks continued to ease lending standards and most terms on all major types of loans other than loans secured by real estate.
For the first time in over 20 years, the Commercial Finance Association’s Annual Convention will be held in New York City. The convention will take place November 16-18, 2011, at the New York Marriott Marquis. CFA’s annual convention is the largest gathering of asset-based lending and factoring professionals and offers unparalleled networking and educational opportunities. The event attracts professionals from around the world involved with asset-based lending, factoring, appraisals/auctions/liquidations, turnaround management and commercial finance law to collaborate on issues in commercial lending.
Now that we have all lived through the credit crisis and are still around to talk about it, where do we go from here? What do finance professionals and CFOs need to know in order to navigate the U.S. financing and capital markets now and in 2012? Monroe Capital’s Ted Koenig addresses three important areas of concern going forward.
While traditional financing options are well suited to most companies, they don’t fit the needs of every business. As a result, lenders are increasingly providing financial products that offer new levels of flexibility. This rising tide of creative financing vehicles is giving companies more options. The advantage to businesses is clear: They can enhance their working and growth capital to fuel business plans and help maintain a competitive edge. Enter the hybrid loan.
To gain their perspective on the current state of the asset-based and cash-flow lending markets, ABF Journal tapped the collective wisdom of Pete Connolly and Jim Hudak, co-heads of CIT’s Corporate Finance group. The two discuss their outlook for middle-market borrowers, key borrower sectors and the lessons learned during the Great Recession.
Stability and consistency remain key to asset-based lending’s evolution as a primary financing option, even allowing the industry to emerge from the Great Recession perhaps better positioned for growth than ever before. Moreover, experience and flexibility will help secured lenders to navigate a changing — and shrinking — global landscape as technology and communication tools continue to make the world a smaller place.
When it comes to capital markets issuance, ABF Journal turned to Wells Fargo Capital Finance’s Dorothy M. Killeen to explain where asset-based loans fit in the grand scheme of things. In the following Q&A, Killeen explains the differentiating characteristics of various ABL combinations.
Finance executives often bristle when they first hear the prices offered by a debt buyer for their charged-off accounts, or they operate off of a general notion that selling their debt just doesn’t make economic sense. What they are often missing, however, is a deeper analysis of their actual overall bad debt liquidation costs and assumptions.
Once again, ABF Journal checks in with five ABL industry executives to find out their take on the state of things. This year, the consensus is quite clear: In an effort to book loans to their institutions’ balance sheets, asset-based lenders have skated back into play … and fiercely at that. But just how willing are borrowers to engage to keep structures sound and price rational levels?