Liability management opportunities for mining & metals companies during a downturn

Mining & metals companies can take advantage of low prices in the leveraged finance markets to manage their liabilities amid the expected recession

22 SEPT 2022

Full announcement including disclaimers and offer restrictions available via White & Case (Source: White & Case)

Inflation and interest rates are on the up and activity in the leveraged finance markets is down in 2022, causing challenges for investors. At the same time, this economic environment creates opportunities for the mining & metals sector to manage liabilities and refinance debt.

After record levels of activity last year, leveraged finance markets slowed in the first half of 2022 as lenders and borrowers contended with rising interest rates, inflation, and other macro-economic and geopolitical headwinds.

During the first half of 2022, new leveraged loan and institutional loan issuance dropped by one-fifth and two-thirds, respectively, year-on-year. New issuance activity in the high yield bond markets in the first half of 2022 dropped to levels not seen since the start of the Covid-19 pandemic, falling by more than three-quarters year-on-year. During the second half of the year and into 2023, volatility is likely to continue weighing on the market.

In response, cautious investors have pulled back from leveraged loans and high yield bonds in favor of safe haven assets like US Treasuries, which are providing higher yields as interest rates rise. Stubbornly high inflation and rising interest rates contributed to this abundance of caution."

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