Data snapshot: Sub line pricing increases abate

The increase in pricing for subscription lines plateaued in the second half of 2023 following a surge over the prior year, according to Haynes Boone’s inaugural Fund Finance Annual Report. It found that the rate of increase – measured from clients’ data – slowed to lower-single digits, down from the mid- and high- single digits between Q4 2022 to Q2 2023.

Spreads on one-year tenor lines have begun grouping in the low- to mid- 200 basis points area.

And surveyed respondents expect that this stability will be the theme for 2024, with most predicting most major change or only small ones in either direction.

Haynes Boone also found that a sizable majority of respondents to a survey predicted robust fund finance market activity for the new year, with a combined 63 percent anticipating different levels of increases.

But both borrowers and lenders have lingering anxieties for 2024, following a challenging fundraising environment and last spring’s banking crisis.

GP respondents were most concerned about the fundraising environment, as well as the potential for further turmoil in the banking system making borrowing more difficult.

Meanwhile, lenders’ top concerns were about regulatory changes, increased regulatory capital requirements and funding pressures tied to their deposit costs.

Haynes Boone’s survey had 121 respondents at 61 institutions. These included sponsors, lenders of varying size and law firms from multiple countries, skewed towards the US, the law firm noted. Data was also gleaned from the law firm’s own practice.