Corporate Debt and Treasury Report 2023

The 2023 Corporate Debt and Treasury Report, produced in partnership with Herbert Smith Freehills, has been released on 11 May. 

Key conclusions from the research analysis include:

• Nearly 80% of our respondents reported a neutral to negative business outlook. However, the corporate treasury has remained resilient in these challenging times, having built robust processes and debt strategies off the back of a number of economic shocks over the last few years. For many, dealing with uncertainty is now BAU. That said, the current uncertainty requires treasurers to be nimble in their debt strategy.
• Whilst banks remain the mainstay corporate debt provider, over time there has been a greater shift towards the DCM markets and, for unrated corporates, term loan private placement markets. Interestingly, this year there has been a jump in those expecting to increase net debt (to the highest level in five years), despite the increase in borrowing costs.
• Inflation and supply chain issues, coupled with the varying abilities to pass on input costs to customers, has resulted in significant increases in working capital for many corporates and therefore a greater need for debt.  In spite of the neutral to negative business outlook held by the vast majority of our respondents, there are signs that corporates are in a bullish mood and respondents are anticipating higher organic investment in capital expenditure and are also projecting higher dividends and share buybacks for the year.
• There has been a general mood shift on Sustainable Finance. Whilst it remains the talking point in treasury circles, it faces a number of headwinds. These vary from the pressure to get the deal done in uncertain times, the very real challenges in completing Sustainable Finance transactions from a multitude of angles and questions as to whether Sustainable Finance really moves the needle on a corporate's ESG journey making it a worthwhile pursuit. That said, there was certainly a strong cadre of those advocating for it and a sense that corporates would be required to meet broad ESG hurdles whether or not entering into Sustainable Financings.
• Views were polarised on the use of interest rate hedging in the current market.  On the one hand, there is a case of those requiring certainty; on the other hand, there are those predicting that we've reached the top of the interest rate market.  

We hope you find these results informative and would like to thank those who participated in our research. In particular, we are grateful to those who took part in our follow-up interviews to discuss the survey results. 
 
If you have any feedback or would like to discuss the issues raised, please contact us at technical@treasurers.org.