Page 3 - MTIA Summer 2022 Market Brief

Introduction

The global loan market has seen unprecedented change since the beginning of
the 2020s. We began the decade with a pandemic. The macroeconomic ripples
from that rough start have continued to create structural shifts. We’re excited to
share our Trust, Trust Agent, and Custody insights on the decade so far.

• The loan market has undergone significant structural changes. From our
observations, economic uncertainties and rising interest rates affected
borrower needs, lender priorities, and deal structures. The pressure to adapt
is intense. (“New Norms, New Needs”)

• In our interactions with clients, we have seen both borrowers and lenders
amending and extending current loans rather than refinancing because
interest rates and credit risk factors have become more complex. We’ve also
noted that hybrid financing has continued to restructure the loan market with
seemingly infinite combinations of private and bank participation.
(“Deal Structures and Trends”)

• As we have seen, private lending has captured market share from traditional
commercial banks and broadly syndicated lending. (“The Evolving Landscape
of Private Lending”)
• In our experience, Collateralized Loan Obligation (CLO) managers are
increasingly focusing on refinancings and resets to extend deal life and adapt
to lower cost structures. The availability of primary loan supply remains a
crucial factor for new CLO origination. (“CLOs in the Spotlight”)

• We believe flexibility and innovation will set the loan servicing agenda. We find
that nimble responsiveness adds more value than pure scale, with greater
efficiency. (“Loan Agency Services: The Scale Trap”)

• Service providers must lean aggressively into technology and data
transformation efforts. In our interactions, new transaction structures and
higher scrutiny from regulators are changing data needs among loan market
participants. (“Tech in the Balance”)

• From our perspective, market changes and emerging client needs have
unexpected benefits for loan professionals at every level, offering greater
engagement and providing reinforcement of essential valuable skills.
(“New Skills and Careers in Loans”)

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