Don’t panic, adjust

November 2023 saw a sharp rise in refinancing activity as Treasury yields fell and average spreads on investment-grade debt - the premium charged over Treasuries - touched 111 basis points, which was the lowest level of the year.  Doubts surrounding debt issuance conditions in 2024 left markets divided on the direction of interest rates and the economy.  S&P updated their forecasts for 2024 last month, and they acknowledged the trends supporting covered bond issuance may be weaker in 2024.  What does this mean for companies?  They have less cash on hand.  Less cash on hand does not mean that companies are in a problematic position.  They simply need to leverage the resources they have.  Companies that plan ahead, and think strategically about their next moves, will avoid the more common pitfalls that plague their peers in the industry.  Financial crises are not the same thing as a meltdown in market demand.  Consumers are still spending money, and the smart companies will position themselves accordingly.

The best place to start is with three simply steps.

1)      Don’t panic.

2)      Don’t cut your workforce.

3)      Be in touch with your end customer(s).