‘A positive recovery before the end of the year’

Predictions are difficult given the unprecedented nature of the crisis, but many in the market are confident there will be a positive recovery before the end of the year, delegates heard at Real Asset Media’s European Debt Finance & Investment Briefing, which was held online recently.

‘This crisis has been a black swan event, that unlike the GFC couldn’t have been predicted and the consequences of which are even harder to predict,’ said Anthony Shayle, independent consultant. ‘Normality will return, but we don’t know when and in what shape or form. We’re in uncharted territory and we don’t have a map’.

The pandemic was a surprise and a shock and it will lead to a correction and some distress in the market. The question is how much.

‘I think it is very unlikely that we’ll see massive distress in the market this year,’ said Emma Huepfl, Managing Director, European Credit Strategies, CBRE Global Investors. 

‘Renegotiations and restructurings will be required, because too many businesses have suffered,’ said Jonathan Lye, Director, Auxilium Financial Risk Management. ‘The way ahead depends on how much permanent change there will be in the way people behave, whether they return to shops, offices, restaurants and so on. Personally, I believe there will be a positive recovery before the end of the year. Q4 will look a lot more like Q1’. 

The view from Germany is optimistic, as the market never ground to a halt, not even at the peak of the pandemic. ‘We’ve completed the deals we started in Q1, when there was a lot of activity, every deal has been studied and examined and no one has pulled out of any deal,’ said Carsten Loll, Partner, Real Estate, Linklaters. ‘But we also initiated and completed a deal in Hamburg during lockdown, which was extraordinary’.

Looking ahead, the sentiment is positive, he said: ‘Clearly2020 will not be a repeat of 2019, but given where we were just a few weeks ago we can see things are changing for the better. Normality will return in the second half of the year’.

That means that the issues of the past will surface again. ‘There are still immense levels of liquidity that need to be invested,’ Loll said. ‘It will come in a big wave and the lack of product will return to being the main problem’. 

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