19.07.23
Brotherton Market Update
Brotherton’s Insights
The market remains liquid. It’s a challenging environment to get deals over the line but deals are being done nonetheless.
When a deal makes sense, it’s imperative to move swiftly. Since we started writing this market update, 5 year SONIA swaps have increased by c. 65 bps.
Even cheap debt isn’t cheap. With 5-yr SONIA swaps at c. 5.18% the gap has narrowed between ‘cheap’ money and the traditionally ‘expensive’ c. 10% IRR lenders. The extra leverage on offer from the more expensive lenders is proportionally less expensive than it used to be.
Fixed rate money can be interesting money. Lenders who have raised fixed-rate pots of capital have become comparatively cheaper as swap rates have increased.
There’s still capital waiting to be deployed. Alternative lenders sitting on dry powder are keen to deploy into deals that make sense.
Flexibility is key. Lenders who aren’t under regulatory pressure are able to offer flexible solutions with wider headroom on sizing and ongoing financial covenants.