UK debt market soars in first quarter

A record number of refinancings and recapitalisations have been completed in the first quarter of 2021 in the UK, according to research from global investment bank GCA Altium.

The firm’s ‘MidCapMonitor’ report, which analyses debt transactions across several major European markets, found that 71 deals were completed in the UK in Q1 – the highest amount for a single quarter since the firm established the research in 2015.
 
The figures also represent more than half of the completed transactions during 2020, highlighting the strong bounce-back of the deals market following the Covid-19 pandemic. Record performance in the UK has been bolstered by an increased optimism in its vaccine roll-out and improving business sentiment.
 
The GCA Altium MidCapMonitor report also identified that a proposed rise in capital gains tax (CGT) ahead of the March 2021 budget prompted many to realise gains early. With no rise being formally announced by the Chancellor, the report predicts that activity is expected to remain strong until at least the Autumn budget.
 
Simon Chambers, GCA Altium Managing Director, says: “The number of debt deals completed in Q1, coupled with the bounce back of the wider M&A market, represents a positive return to performance following a year of uncertainty for the markets. There is a renewed optimism around a return to growth and the impact of the pandemic on the deal market is beginning to fade.
 
“However, it is important that we continue to support those companies that remain under pressure as a result of the pandemic, and that the debt market remains easily accessible to enable them to return to growth. Nevertheless, as market sentiment and activity levels remain positive, alongside the continued reopening of the UK economy, we expect there to be significant competition for high quality businesses hitting the market in Q2 21.”