• Date

    29 Feb 2024
  • Category

    Corporate Finance, Advisory & Restructuring

2024 Debt Markets in Ireland

As we continue to navigate through the ever-changing macroeconomic uncertainties facing Irish businesses, one constant remains: the importance of having a solid financial strategy, particularly as it pertains to managing debt.

2023 was a year of significant economic uncertainty, continued market volatility, and rapid technological advancements redefining the way businesses need to operate.

In 2024, the challenges and opportunities facing businesses are shifting, and staying one step ahead requires a proactive approach to debt management.

At Azets Ireland, our Debt Advisory Team, incorporating experienced finance professionals from our Corporate Finance & Corporate Advisory teams, can provide tailored debt management solutions and help you navigate through this dynamic market and help you target your efforts more effectively.

The Current Landscape

As we look back on 2023, it is evident that the global business environment, not just in Ireland, has undergone a seismic transformation. Economic uncertainties from conflicts, rising interest rates and rising inflation have all played into the volatile and uncertain landscape that lies ahead in 2024. Added to this, technological advancements are redefining the way people and businesses operate. In such a dynamic & fluid market, business leaders are increasingly reliant on the need for certainty where they can find it, and a solid debt management strategy can play a crucial role in this.

Navigating Through Evolving Debt Markets

Debt, when managed effectively, can be a strategic tool for financing growth and expansion, or simply consolidating your current position. However, debt markets in Ireland are evolving and an effective debt strategy requires a deeper understanding of the available options.

The sole aim of our Debt Advisory Team is to offer our expertise and insights so that our clients can make informed decisions regarding their debt structures and financing options, and help with the overall risk management strategy of your business.

What lies ahead in 2024

In 2024, Irish businesses will be presented with a myriad of different growth opportunities, whether it's through M&A, expansion into new territories or investments in new technologies. Grabbing hold of these opportunities when they arrive requires capital, and taking on debt is often the solution. In an Irish context raising this debt comes with some hurdles:

  • Pillar Banks: With Ulster Bank & KBC having left the market, the bar for new lending with traditional pillar banks has become higher. Borrowers need to be prepared for banks to request additional due diligence, for decisions to take longer, and for the drawdown of funds to come with additional red tape. It may be the case that some borrowers will not meet the loftier thresholds set by pillar banks and need to turn to alternative lenders.
  • Alternative Lenders: We are likely to see a sizeable increase in borrowers taking on debt from alternative lenders. This debt will likely be more flexible than traditional banks (e.g. non-amortising loans with bullet repayments; interest roll up etc), and less conventional (e.g. factoring, mezzanine etc) and borrowers will need to explore these options with an open mind.
  • Interest Rates: With the continued uncertainty around interest rates and inflation, more so now around when cuts to base rates will be applied, borrowers may be slower to take on debt. However, the current market is still relatively good for borrowers but there is still a risk that conditions could change through 2024.
  • Geopolitical Risk: With two ongoing global conflicts, added to the fact that a large portion of the global population will be going to the polls in 2024, this only adds more uncertainty to an already uncertain market.
  • ESG: ESG is of growing importance to traditional pillar banks with borrowers likely to see lenders seeking to understand a borrowers ESG plans in much the same way they will look at financial projections. Those with no plan, or no perceived route to having a tangible plan in place, are likely to face higher interest margins, tighter covenants or a straightforward “No” from these lenders.

Understanding and Mitigating Risk

Effective debt management goes beyond simply securing funding. It involves a comprehensive assessment of a company’s risk strategy and how best to mitigate risk in today's complex financial market, be it interest rate fluctuations, liquidity challenges, and covenant compliance. Our debt advisory services are geared towards helping our clients identify, monitor, and mitigate these risks, ensuring that their debt structures are as resilient as they can be in the face of potential challenges.

Where Azets Debt Advisory Can Help

At Azets, we understand that there is no one-size-fits-all solution when it comes to debt advisory. Each business is unique, with its own set of goals, challenges, and opportunities. Our approach is centred around delivering bespoke debt management solutions that are aligned with the specific needs of our clients.

Whether it's raising debt for an acquisition, refinancing existing debt, raising new capital for capex or working capital, our team of experts works closely with each client to develop a tailored debt strategy through our extensive network and industry relationships to connect businesses with the right partners, whether it's lenders, investors, or legal advisors.

The Road Ahead

2024 presents businesses with a mix of opportunities and challenges, and the management of debt is central to their ability to navigate what lies ahead. Our debt advisory services are moulded to provide our clients with the expertise, insights, and support they need to make informed decisions, manage risks, and use debt as a strategic tool for growth.

Connect with us to explore how our debt advisory services can help your business to thrive in 2024.

Azets Ireland is a proud supporter of the Treasury Hub, a collaboration between Treasury Solutions Ltd, a specialist treasury advisor and a select number of Irish accounting firms, including Azets Ireland. The Treasury Hub can further assist our clients with specialist advice around interest rate risk management, foreign exchange management and board treasury policies.

About the author

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Allan Barrett

Associate Director | Corporate Finance
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