Transatlantic restructuring activity is set to increase in line with refinancing difficulties over the next 12 months.

Transatlantic restructuring activity is set to increase in line with refinancing difficulties over the next 12 months, led by a high volume of restructurings in North America and Western Europe.

Research conducted by information provider Debtwire in association with Merrill DataSite, shows that that 76 per cent of the 125 respondents believe debt or liquidity issues will be the primary driver of transatlantic restructurings over the next 12 months.

Additionally, more than half (52 per cent) of the financial and legal advisors across North America and Europe who responded, believe that the reticence or lack of liquidity among banks will make the refinancing of debt the most difficult aspect of the restructuring process, even more so than negotiating with creditors, financial forecasting, maintaining third-party relationships and complying with regional regulations.

The study also highlights a wide range of regional and sector-specific drivers influencing transatlantic restructuring levels in the coming months, including sovereign debt crises in Southern Europe, lingering distress in the real estate market and companies’ looming debt maturities.

Respondents predict an uptick in distressed M&A. Fifty-four per cent believe non-core asset sales will be central to most companies’ restructuring strategies over the next 12 months. Respondents expect to see an especially high volume of restructuring-related asset sales, divestitures and spin-offs in the real estate and financial services sectors.
 
Companies’ individual restructuring strategies will likely be shaped partly by creditors in the months ahead. In the US and in the UK, the overwhelming majority of respondents expect senior creditors to have a significant influence on borrowers’ restructuring processes over the next 12 months. Approximately one-half and one-third of respondents expect the same of private equity sponsors and junior creditors, respectively.