Automotive Capital Confidence Barometer

Access to capital

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Compared with two years ago, banks are on a stronger footing and better capitalized. Yet this healthier picture does not always translate into increased lending.

Many banks have tightened lending standards, particularly for small-to-medium enterprise (SME) borrowers. Banks also face higher capital requirements under impending Basel III regulations, which could restrict their ability to increase the flow of credit to businesses.

What is your level of confidence in credit availability at the global level?

Global deleveraging expected to increase

Many automotive companies have taken advantage of improved credit conditions and a favorable rate environment over the past year to strategically increase leverage, which in turn has increased their debt-to-capital ratio. Fifty-three percent of automotive respondents have a debt-to-capital ratio less than 25%, down from 64% a year ago.

With capital structure optimization mostly in place and current economic and lending conditions uncertain, only 16% of automotive respondents expect to increase their debt-to-capital ratio over the next twelve months, compared with 22% six months ago.

How do you expect your debt to capital ratio to change over the next 12 months?

Refinancing improves slightly

Twenty-six percent of companies plan to refinance their borrowings over the next 12 months, up from 23% in April.

Most are doing so in order to extend the maturity of their debt (32%), optimize their capital structures (29%) or reduce their interest expense (25%). Only 4% of respondents plan to retire maturing debt, as opposed to 14% six months ago.

For European borrowers that have refinanced existing bank loans, many have used the US private placement market.

What will be the primary purpose of your refinancing?

 

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