PNC 2024 Outlook: Debt Capital Markets

In 2023, the debt capital markets have been as subject to the volatile conditions that characterize the current economic cycle as any segment in the market. Conditions including elevated inflation, interest rate hikes, geopolitical uncertainty, lackluster merger and acquisition (M&A) activity, and concerns of an impending recession were all impactful to activity in 2023. While the bank market was open and constructive in 2023, the combination of these factors contributed to a decreased demand for loan activity throughout the year. In recent months, corporate bond issuance has stabilized, and issuance has been relatively healthy.

Looking Ahead to 2024: Stabilizing Rates Should Support Debt Market Recovery

Looking ahead, PNC Debt Capital Markets is cautiously optimistic for both loan syndications and fixed income. Expectations are that debt markets will remain constructive and demonstrate resilience, provided that economic conditions continue to hold up in a higher-for-longer interest rate environment. Borrowers can expect bank lenders to remain disciplined, focused on relationships and returns. In the fixed income markets, there is an expectation of higher volume of refinancing activity across both Investment Grade and High Yield borrowers coming in 2024 versus 2023 and a constructive expectation for this activity based on the current market backdrop. Bond market investors remain engaged across both asset classes, particularly seeking longer duration in the Investment Grade market.

The market environment is not without uncertainty, particularly hinging on the performance of the M&A market, which is a primary driver of overall debt issuance, for both loans and bonds. Following on the heels of rising rates, M&A activity declined in 2022 and has remained slow through 2023. The return of a steady rate environment, as opposed to a rising one, combined with pent-up demand, should lead to a pick-up in transactions in 2024.

As companies look for guidance and direction to support financing decisions, the Debt Capital Markets team is positioned to provide current market insights and recommendations on capital raising solutions and refinancing options.

“As businesses continue to operate in an uncertain environment, PNC Debt Capital Markets remains committed to working alongside them,” said Douglas Shaffer, head of PNC Debt Capital Markets. “We can’t control the variables impacting the debt markets, but we are focused on helping clients achieve the best possible outcomes, both in challenging economic cycles and periods of stability."

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PNC's Debt Capital Markets group provides dedicated team coverage and a collaborative advisory approach, leveraging PNC's syndications and fixed income expertise. Learn more here.

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