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The Impact of Rising Interest Rates and the Need for Increased Restructuring Activity

By David Bulley
April 01, 2016

Accommodative monetary policies over the last eight years have extended key refinancing hotspots from 2012-2015 to 2018-2021. With the Federal Reserve having now marked the end of such policies in the United States, a new and, to some extent, necessary wave of restructurings can be expected in the short and medium term.

Following the onset of the 2008 financial crisis, a wave of restructurings was expected as deteriorating market conditions impacted the already stressed balance sheets of companies. The period of 2012-2015 was expected to be the peak for restructuring activity, as pre-crisis LBO and M&A debt (the so called “wall of debt”) came up to maturity. Instead, throughout the crisis years, restructuring and insolvency activity has remained generally low as central bank policies and open capital markets, particularly in the U.S., provided companies with easy and affordable access to capital.

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