Rising borrowing costs could put businesses under pressure, Walker Morris warns
Philip Scott said companies with finance deals nearing maturity could face higher refinancing costs.
Walker Morris has warned that rising bond yields and expectations of higher interest rates could increase borrowing costs for UK businesses.
Philip Scott, partner, banking and finance at Walker Morris, said companies with finance deals nearing maturity could face higher refinancing costs, while acquisitions, investment and expansion plans may become more expensive.
Scott said: “The recent increase in bond yields and market expectations of higher interest rates is not just a concern for homeowners.
“Businesses across the UK should also be paying close attention because movements in the wider debt markets ultimately influence the cost and availability of corporate finance.
“For companies with existing facilities approaching maturity, refinancing may become more expensive than anticipated.”
He added: “Businesses considering acquisitions, capital investment or expansion plans may also find that the economics of those projects look different as borrowing costs rise.
“While lenders remain open for business, we are likely to see greater scrutiny around cashflow forecasts, leverage levels and covenant compliance.
“In that environment, preparation becomes increasingly important.”
Scott concluded: “Businesses should use this period to review their funding arrangements, understand their refinancing timelines and engage with lenders early.
“Those conversations are often most productive before funding pressures emerge rather than after.
“Companies that take a proactive approach will be better placed to navigate any prolonged period of market volatility and make informed decisions about investment and growth.”
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