Over the past 12 months, we’ve witnessed a significant recovery in the market, with more lenders actively seeking business, resulting in higher leverage, lower pricing and structural terms increasingly favorable to borrowers
NEW YORK--(BUSINESS WIRE)--While the credit markets are improving, lenders in the middle market are still being selective about their borrowers, according to Chris Cantwell, Managing Director and Group Head of CIT Leveraged Finance, Transportation, at CIT Group Inc. (NYSE: CIT), a global leader in transportation finance. This is just one of the insights Cantwell offers in Financing Outlook for Aerospace & Defense: Focus on Quality, the latest in a series of in-depth executive Q&As featured in CIT’s Executive Spotlight series (http://executive-spotlight.cit.com).
“Over the past 12 months, we’ve witnessed a significant recovery in the market, with more lenders actively seeking business, resulting in higher leverage, lower pricing and structural terms increasingly favorable to borrowers,” says Cantwell. However, he also explains that borrowers with limited future revenue visibility or operating with unclear direction are still finding it challenging to secure financing on attractive terms as lenders desire to work with higher quality companies.
Defense and government services remains an attractive sector to lenders, due to a typically high proportion of revenues tied to contracts, decent visibility on future orders and high switching costs, says Cantwell. “The lending market is easily spooked by worldwide events, but we find that aerospace and defense companies can leverage their more predictable revenue to continue to access the market during volatile times. While we do expect the Department of Defense to take a hard look at some of the more expensive and high-profile procurement programs, and the current focus on the contracting efficiency will continue, we are optimistic that its budget will provide opportunities for our aerospace and defense clients.”
Cantwell also offers that some general advice for companies seeking financing, especially those in the middle market, is to have robust financial reporting and forecasting well in advance of a major transaction, as well as a clear, concise business plan. “A coherent explanation of the company and its operating environment can go a long way in building understanding on the lenders’ part, leading to more appropriate structuring and pricing.”
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Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $35 billion in finance and leasing assets. It provides financing and leasing capital to its more than one million small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. www.cit.com