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January 11, 2016

Phoenix Lending Survey Results Shows Interest Rate Spreads Continuing to Increase

Philadelphia (January 11, 2016) —- From the fourth quarter Phoenix Management “Lending Climate in America” Survey, results shows continued expectations for interest rate spreads to increase indicating a less attractive market for borrowers moving forward into 2016.

Lenders confidence on how they expect the U.S. economy to perform during the next six months continues to deteriorate with a grade point average of 2.11 in Q4 2015 down from 2.32 in Q3 2015, and a GPA of 2.13 beyond the next six months. Lenders predictions about the Fed increasing interest rates finally came true in December, as the Fed raised rates by 25 basis points. Twenty-three percent of lenders believe their financial institution will increase interest rate spreads, which is a six percentage point increase from the previous quarter, while six percent of lenders expect their financial institution to reduce interest rate spreads, a five percentage point decline from the prior quarter.

In addition, lenders have shown a marked shift in the factors they believe will have the strongest potential to affect the near term economy. Fifty percent of the respondents believe that a) the stability of the stock market and b) unstable energy prices could have the strongest impact on the economy in the next six months. Lenders were also asked what they believe will have the greatest impact on the U.S. equities performance in 2016. A total of thirty-eight percent of respondents believe it will be international economic pressures while thirty percent believe the Federal Reserve’s action regarding interest rates will have the utmost impact.

“In light of the recent volatility in global markets prompted by the dramatic sell-off in China, our respondents were spot on in their predictions. It appears that our lender optimism on the U.S. economy continues to decrease with an increasing anticipation of tighter loan structures and increasing interest rate spreads,” says Michael Jacoby, Senior Managing Director and Shareholder of Phoenix. “In this survey, 68% of lenders believe the economy will perform at a “C” level within the next 6 months, which is a thirteen percentage point increase from the previous quarter of 55%.”

Click here to view the full results of Phoenix’s “Lending Climate in America” Survey.

About Phoenix:

For over 30 years, Phoenix has been effectively implementing operationally focused business solutions for middle-market companies across all economic situations. Our three service groups work together as stabilizing pillars to deliver creative solutions to unique business challenges. Phoenix Management Services® provides hands-on turnaround management assistance, complex restructurings, crisis and interim management, liquidity management and forecasting, and operational solutions. Phoenix Transaction Advisory Services provides quality of earnings review, management/organizational review, business integration, sell-side business preparation and other transaction related support. Phoenix Capital Resources® provides special situation banking solutions including M&A advisory, private placements of debt and equity, and complex balance sheet restructurings. Phoenix Capital Resources is a U.S. registered broker-dealer and member of FINRA and SIPC. Proven. Results.®

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