The international law firm said, however, that rather than demonstrating a return to normality, its latest Corporate Funding Monitor showed continuing structural shifts in how companies accessed finance, with balance sheets now looking very different.
The total value of loans made globally to corporates, excluding financial institutions and real estate companies, last year reached $3.9tn, exceeding the pre-crisis peak of $3.87tn. The total value of finance, across loans, bonds and equity, provided to business globally also reached a new high water mark, exceeding $6tn for the first time in 2014.
The report said the type of financial products used had changed — with the value of bonds issued by businesses increasing 70 per cent since 2007 to more than $1.5tn, in spite of a 10 per cent fall year on year in 2014.
While loans remain the predominant source of funding for corporates globally, accounting for 63 per cent of the total, it is not just banks that provide them. According to a recent McKinsey report the value of outstanding bank loans to non-financial corporates in advanced economies decreased $4tn between 2007 and the second quarter of 2014 to $41tn. “Other loans” (those provided by non-bank lenders) accounted for a further $29tn.
Allen & Overy said the findings of the McKinsey report were in keeping with research the law firm had conducted during 2014 into the prevalence of alternative finance providers, which showed that, while on average bank lending remains the largest source of funding among European corporates, alternative finance now accounts for 41 per cent of their total funding mix.
“Another stark structural change that is yet to show any meaningful signs of reversal is that of the dynamic between bonds and loans in the investment grade space,” said the report.
© Financial Times
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