Sector Focus: Finance

With a rise in Private Credit and no signs of it unabating and we are seeing demand for TLBs, Synthetic Risk Transfer and CLOs.

I recently ran a LinkedIn poll asking: what will be the busiest practice area in banking and finance this year for law firms? The results follow:

Structured Finance: 47%

Leveraged Finance: 34%

Real Estate Finance: 5%

Project Finance: 5%

Other: 8%

These results very much reflect what seems to be happening in the market. Here is my take on the results and the market:

Structured Finance: seems to be busy as interest rates are still relatively high banks seem to be offloading risk and freeing up capital via securitization (mortgage-backed, CLOs). Also, the growth of Private credit they are increasingly using structured finance products as a central tool to be used for private credit deals and complex risk transfer structures. Additionally, many Corporates seem to prefer tailored structured solutions to navigate economic uncertainty and tightening credit spreads.

Leveraged Finance: remains busy due to plenty of refinancing activity and selective buyouts but lenders remain caution due to tighter credit conditions and high interest rates have not led to an influx of new money deals yet fuelling leverage finance.

Real Estate Finance: whilst seeing an uptick in activity the market remains caution due to valuation uncertainty caused by macroeconomic conditions investors and lenders remain cautious and reduced transaction volumes reduce the need for real estate financing.

Project Finance: is a safe and probably a bullet-proof practice area due to the importance of energy to fuel the world however there are significant challenges in project finance regarding longer lead times and funding challenges. We expect project finance to remain steadily busy over the next 10 years.