2023 Was a Year of Challenging Debt and Capital Markets
Unpredictable capital markets and a constrained capital raising environment resulted in companies seeking alternative forms of capital , including the continued use of asset securitizations by upstream producers in the oil and gas sector , borrowers accessing institutional bank debt rather than the capital markets , and , in some cases , when institutional bank debt itself was constrained , by accessing private credit .
Bracewell closed over $ 39 billion of financings in 2023 . Here are some of the broader trends that emerged from these deals :
Even our strongest borrowers faced headwinds in 2023 .
In the absence of favorable debt capital market conditions which precluded a planned capital markets raise , Bracewell acted for one of its investment grade borrowers in connection with $ 1.9 billion of term loan debt from a variety of institutional lenders .
But challenging markets call for innovative and creative solutions .
Bracewell represents Credit Agricole on credit facilities in favor of McDermott International , Ltd ( McDermott ). In September , more than 75 percent of McDermott ’ s secured letter of credit providers , funded debt creditors and equity holders agreed under a transaction support agreement to a path to amend and extend those credit facilities for three years pursuant to procedures in the Netherlands under the Dutch Act on Confirmation of Extrajudicial Plans ( Wet Homologatie Onderhands Akkoord or WHOA ) and a Restructuring Plan under Part 26A of the Companies Act 2006 ( UK ) in England .
We also acted for the administrative agent in connection with the restructuring and refinancing of a $ 250 million assetbased facility secured by , among other things , interests in life insurance policies . The borrower encountered difficulty securing a refinancing facility after the failures of various banks and the ensuing tightening of bank balance sheets , but successfully found a private credit source to refinance the facility .
In the upstream space , we saw producers return capital to equity investors through the securitization of oil and gas properties . Bracewell advised the administrative agent , in connection with the closing of a $ 565 million securitization of producing assets that impacted the credit facility provided by the administrative agent and the other lenders to a private exploration and production company .
The Year Ahead
Stabilization or lowering of interest rates may result in an uptick in capital markets and finance activity in 2024 , but the extent to which the volatility of 2023 carries over remains a concern . The tightening of institutional credit to E & P companies may continue , but borrowers with low leverage , reputable management , and healthy sponsor equity will be successful in attracting interest and support from senior debt providers . bracewell . com