Financing the corporate sector
Deloitte Belgian CFO Survey Q3-2010
In line with the improvement of the credit conditions, bank borrowing remains attractive as a source of financing. Corporate debt is still in favour. Since the third quarter of last year, all three forms of finance - bank borrowing, equity and bond issuance - are rated as attractive. However, equity is still rated significantly less attractive as compared to the other forms of financing.
Moreover, it is not expected that the Weighted Average Cost of Capital (WACC) will change significantly over the next three years. Half of the CFOs expect a small increase of the WACC, although the attractiveness on the longer term stays almost stable.
Looking at the expectations on the long run, we can conclude that according to CFOs, external financing will not become less available in the next five years (80%).
If there is a need for a restructuring of the capital structure, the willingness of banks to restructure loans is crucial. A quart of the CFOs remarks an augmentation of the willingness, whereas 40% doesn’t remark some changes.
Given this view on the future evolution,it can be concluded that most CFOs do not expect that the current situation on bank borrowings will change significantly in the next few years.