The results from the third quarter 2007 Deloitte CFO Survey, undertaken during the period of 21st September to 2nd October, indicate majority of UK CFOs think the financial market turmoil will negatively hit the economy, M&A activity and credit availability for corporates, but they see it as less of a negative for their own companies.

Availability less of a problem than cost of credit
The availability of credit is seen by CFOs as less of a problem than the cost of credit. So CFOs seem confident about being able to borrow, although it may be at higher rates, with 78% regarding short term market interest rates as high and 58% viewing longer term rates for corporate credit as “costly”.

Corporates believe they are undervalued and underleveraged
63% of CFOs believe their company is undervalued by the equity market, despite the majority (60%) regarding UK equity valuations as fair.

43% of CFOs surveyed have taken more financial risk onto their company’s balance sheet in the last year. Moreover, despite tougher credit conditions, 56% of respondents plan to raise their level of gearing in the next 12 months.

Banks remain the favoured source of finance
The survey underlines the extent to which UK corporates use the banking system and debt markets to meet their financing needs, with a strong preference for bank debt compared to other forms of debt financing. Only 24% of CFOs rated equity as an attractive source of finance.

Moreover 72% of CFOs expect to raise new debt or refinance facilities in the next 12 months.

51 CFOs took part in this inaugural Deloitte CFO survey, representing 13 FTSE 100 companies, 34 FTSE 250 companies and 4 private companies or subsidiaries of companies listed overseas.

Download the full report: The Deloitte CFO Survey: Benchmarking Corporate Financial Attitudes (PDF, 4138KB)