Early May Market Post / FGA YTD April 2024 Activity Update [5/6/24]

Here at the beginning of May, overall tone is firm in the credit markets. Healthy competition and light supply have resulted in tight credit spreads across institutional, private credit, and pro rata (commercial bank) markets. Absolute cost of debt remains elevated with persistence of SOFR rates over 5.00% and 10yr UST ~4.50%.  

Some of the more interesting economic commentary in recent weeks has spoken to an observable trend of corporate borrower deleveraging in both investment grade and non-investment grade markets, and increasing focus on returns available on balance sheet cash as a result of this persistence of higher borrower costs and cash yields.  

WSJ 5/1/24: “Companies Begin Cutting Debt Due to High Interest Rates” https://www.wsj.com/finance/investing/companies-begin-cutting-debt-due-to-high-interest-rates-ec1167f8  

Goldman Sachs Exchanges Podcast 4/24/24: “Why Treasury auctions – and rising deficits – are becoming a focal point for markets and investors” https://www.goldmansachs.com/intelligence/podcasts/episodes/auctions-fine-phillips.html  

WSJ 4/18/24: “Companies Belly Up to Cash Buffet, in Five Charts” https://www.wsj.com/articles/companies-belly-up-to-cash-buffet-in-five-charts-cf293394    

Meanwhile, Fountain Gate Advisors has been active through the first four months of 2024.  

Successful engagements have included:
– Amendment negotiation with a regulated bank on behalf of an e-commerce company
– Debt and treasury management advisory for an industrials company
– Capital structure advisory and financial strategy consulting for an early-stage healthcare technology company

The firm’s most impactful advisory assignments to date have come via referrals from trusted advisors to middle market business owners. We also take pride in making impactful introductions for others. Looking forward to reconnecting with many friends of the firm over the coming weeks.  
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