From the first quarter Phoenix Management “Lending Climate in America” Survey, results show that lenders continue to be very optimistic about lending and economic indicators.
In terms of lending, there are several categories worth mentioning. The quarterly diffusion index, which measures lenders sentiment towards U.S. commercial lending, showed a dramatic increase to 45% – the highest index since 2Q 2011. This increase in sentiment by lenders is an indication that banks are encouraged by the economic environment. Also, lenders expect leverage multiple to increase over the previous quarter - multiples in the highest senior debt to EBITDA ratio categories (3.0-3.5x and greater than 3.5x). Two percent of lenders surveyed this quarter, the lowest percentage ever recorded, expect to tighten loan structures in the next six months.
In terms of the economy and its outlook, lenders are just as optimistic. Economic growth sentiment remained at an overall “C” grade this quarter; however the indexes GPA increased to 2.16 from 2.02, an increase of fourteen basis points from the 4Q 2013 results. The trend toward a better grade for the economy continued as more respondents (19% vs. 12% last quarter) switched this quarter in favor of a “B” grade or better. Lenders continue to have very low expectations for increasing Loan Losses, Bankruptcies, Unemployment, and Bank Failures over the next six months. The negative diffusion indexes in these categories are nearing all time lows for the survey, and demonstrate the optimism lenders have towards the economy.
“It’s great to see lenders this optimistic. Our expectation is that lending activity will continue to increase throughout 2014,” says Michael Jacoby, Phoenix Managing Director and Shareholder.
To see the full results of Phoenix’s “Lending Climate in America” Survey, please visit http://www.phoenixmanagement.com/survey/
For over 25 years, Phoenix has provided smarter, operationally focused solutions for middle market companies in transition. Phoenix Management Services® provides turnaround, crisis and interim management, specialized advisory and operational due diligence services for both distressed and growth oriented companies. Phoenix Capital Resources® provides seamless investment banking solutions including M&A advisory, complex restructurings and capital placements. Phoenix Capital Resources is a U.S. registered broker-dealer and member of FINRA and SIPC. Proven. Results.®
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Michael Jacoby, 610-358-4700