Healthcare Debt Financing: Borrowers Benefit in a Hot Market

After the first quarter dip in GDP, June brought heavy scrutiny of the Fed’s plans as they concluded a two-day meeting and updated their various forecasts for growth and inflation. While the taper continues on track to conclude by year end, the Fed made it clear that the pace and mechanisms of further monetary action will be data dependent going forward. It can be easy to get lost in the details of the projections and parsing of Fed governors’ speeches, so it may be constructive to step back and view the broad progress the economy has made as of late. It was only a few short years ago when all lending and trading activity came to a virtual standstill. Since then the equity markets have surged, seemingly marking new highs every month, while IPOs have flooded the markets with new offerings. We can see the difference in our own business as well, as our own assets under management hit a new all-time high this month. More telling of the rebound in the sectors we serve has been the surge in loan demand, new loan structures and the risk lenders are willing to take in pursuit of market share. Today’s options for debt have expanded well beyond traditional bank structures as many specialized debt funds have sprouted up to meet new demand for hybrid capital structures combining debt and equity. We see first-hand, through our debt consulting business, strong increases in demand as well as a rising risk appetite of lenders. The environment has improved dramatically over the past few years as the strengthening economy has spurred the formation of creative financing options to fuel further growth. So in this month’s research piece, we will depart from our usual investment theme and focus on a segment of the economy that has thrived lately as more and more companies have new and creative finance options available to them.

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Best Regards,

Ben Campbell
President & CEO