Its track record for innovation is unparalleled, including the creation of toggle notes, and execution of the largest PIK notes and the largest sub-investment grade hybrid transaction. While in the middle of a credit crunch some of the sector’s most innovative products may not be in vogue for the moment, Credit Suisse can always comes up with creative solutions when clients need them.
“Market conditions are challenging,” says Jim Amine, co-head of global leveraged finance. “There is a lack of liquidity and a large backlog of deals, some of which were underwritten on terms that will not clear the market on that basis. However, the markets are still open, significant pools of capital have been raised to buy the backlog and we have seen a number of significant trades take place recently.”
He says that there will still be opportunities for leveraged finance in the next 12 months, whatever the market environment. “The key will be structuring deals that the market wants, understanding market dynamics and what the market can take, and reverse engineering deals into that. For example, because liquidity is so tight, we are working with the buyside to try to improve liquidity for leveraged finance credits and our fund raising and CLO [collateralised loan obligations] businesses are working to create the next generation of CLOs and other vehicles to create more demand in the market.”
Emerging markets – a core strength for Credit Suisse – will also offer fertile ground, says Mr Amine. “During the recent turmoil, emerging markets have been less affected. They will be very attractive because they have higher growth rates and a significant amount of natural resources that are becoming increasingly scarce and valuable. The financial sponsors are therefore more and more active in emerging markets along with our corporate clients, so there will still be plenty for us to do in the future.”
