Refinancing. Business in conditions of short horizons
Who is vulnerable now?
In June 2025, the corporate distress index increased significantly in some sectors in Europe. Pressure on margins and liquidity increased where refinancing itself is expensive. In the EU commercial real estate (CRE) market, approximately half to four-fifths of all debt (45-79%) is due to be repaid by 2027 - some of these properties do not meet green capital investment requirements and are not profitable at current rental and interest rates. Across Europe as a whole, around €2.8 trillion of corporate debt is due to mature by 2029.
The companies most at risk are those with a high proportion of short-term debt and floating-rate loans, without hedges, with minimal covenant coverage and weak interest coverage. Banks and funds have become tougher and more selective than they were 10 years ago. And ‘cheap money’ is a thing of the past.
In June 2025, the corporate distress index increased significantly in some sectors in Europe. Pressure on margins and liquidity increased where refinancing itself is expensive. In the EU commercial real estate (CRE) market, approximately half to four-fifths of all debt (45-79%) is due to be repaid by 2027 - some of these properties do not meet green capital investment requirements and are not profitable at current rental and interest rates. Across Europe as a whole, around €2.8 trillion of corporate debt is due to mature by 2029.
The companies most at risk are those with a high proportion of short-term debt and floating-rate loans, without hedges, with minimal covenant coverage and weak interest coverage. Banks and funds have become tougher and more selective than they were 10 years ago. And ‘cheap money’ is a thing of the past.
How to protect yourself: practical solutions
Firstly, diversify your sources of financing: reschedule repayments, hold tenders for bond buybacks, open bank lines, attract private debt, and sometimes even sell unnecessary assets.
Second, refinance earlier, on acceptable terms: fix part of the debt in advance, without waiting for the ‘perfect’ rate.
Third, structure the debt for deleveraging, but in such a way as to avoid a maturity wall in a single year: extend repayment terms, replace expensive short-term debt with longer-term, more stable debt, fix part of the rate, and make covenants tiered, with relaxation as metrics improve.
Finally, stress tests: ‘rate +200 bps (+2 percentage points)’, ‘revenue -15%’, ‘loss of a key customer’. Those who do them regularly make decisions based on facts, not emotions. LLC "EIFOS HUB" develops stress tests and runs the test model in advance through several harsh but realistic scenarios of changes in rates, revenue, margins, working capital, and exchange rates.
Firstly, diversify your sources of financing: reschedule repayments, hold tenders for bond buybacks, open bank lines, attract private debt, and sometimes even sell unnecessary assets.
Second, refinance earlier, on acceptable terms: fix part of the debt in advance, without waiting for the ‘perfect’ rate.
Third, structure the debt for deleveraging, but in such a way as to avoid a maturity wall in a single year: extend repayment terms, replace expensive short-term debt with longer-term, more stable debt, fix part of the rate, and make covenants tiered, with relaxation as metrics improve.
Finally, stress tests: ‘rate +200 bps (+2 percentage points)’, ‘revenue -15%’, ‘loss of a key customer’. Those who do them regularly make decisions based on facts, not emotions. LLC "EIFOS HUB" develops stress tests and runs the test model in advance through several harsh but realistic scenarios of changes in rates, revenue, margins, working capital, and exchange rates.
Searching for compromises. This is how one can describe the state of a company that makes strategic decisions about refinancing under stressful conditions. There is little room for manoeuvre: the business is constrained by the rigid framework of reputation and creditor trust. It is necessary to cut costs, freeze entire areas of activity, and negotiate with suppliers.
In 2025, companies that took out loans and debt obligations at low interest rates several years ago found themselves in a rather unpleasant situation. Their contracts are expiring, and they need to take out new loans at higher rates. This ‘financial risk’ can seriously affect profits and future solvency. And in general, the era of uncertainty is not over yet. Therefore, LLC "EIFOS HUB" advises not to delay: refinance debts in advance, fix the terms and reduce risks.
In 2025, companies that took out loans and debt obligations at low interest rates several years ago found themselves in a rather unpleasant situation. Their contracts are expiring, and they need to take out new loans at higher rates. This ‘financial risk’ can seriously affect profits and future solvency. And in general, the era of uncertainty is not over yet. Therefore, LLC "EIFOS HUB" advises not to delay: refinance debts in advance, fix the terms and reduce risks.
Who should be concerned first and foremost?
According to industry reviews, companies with high debt loads, private equity groups with high leverage, commercial real estate developers, and players in capital-intensive industries are at particular risk. For example, according to the latest data from Scope Ratings, almost 75% of loans in European CMBS do not meet the updated standards, which complicates their refinancing. This circumstance is particularly acute in the commercial real estate sector, where the total refinancing gap is estimated at approximately €86–90 billion.
Small businesses and small companies without access to capital markets are often forced to sell assets at the worst possible time, at the bottom of the cycle. They have to restructure production or cut staff.
What to tell investors
Refinancing is a strategic and structural decision. It is important to inform investors not only about interest rates, repayment schedules, covenant structures, and credit history, but also about specific improvements: the release of working capital, sales of non-core assets, fixed hedges, and interest savings.
We are writing this article at the end of 2025, when political instability and the unpredictability of the ‘tariff race’ make it impossible to make long-term and accurate forecasts. Therefore, in a world of general turbulence, it is important to keep control of what can be influenced. In refinancing, these are: the repayment schedule (6–12–24–36 months), the share of short-term and floating debt, the average rate, the covenant buffer, the share of fixed rates, the volume and term of reserve lines, as well as alternative refinancing options (bank/market/private debt) .
According to industry reviews, companies with high debt loads, private equity groups with high leverage, commercial real estate developers, and players in capital-intensive industries are at particular risk. For example, according to the latest data from Scope Ratings, almost 75% of loans in European CMBS do not meet the updated standards, which complicates their refinancing. This circumstance is particularly acute in the commercial real estate sector, where the total refinancing gap is estimated at approximately €86–90 billion.
Small businesses and small companies without access to capital markets are often forced to sell assets at the worst possible time, at the bottom of the cycle. They have to restructure production or cut staff.
What to tell investors
Refinancing is a strategic and structural decision. It is important to inform investors not only about interest rates, repayment schedules, covenant structures, and credit history, but also about specific improvements: the release of working capital, sales of non-core assets, fixed hedges, and interest savings.
We are writing this article at the end of 2025, when political instability and the unpredictability of the ‘tariff race’ make it impossible to make long-term and accurate forecasts. Therefore, in a world of general turbulence, it is important to keep control of what can be influenced. In refinancing, these are: the repayment schedule (6–12–24–36 months), the share of short-term and floating debt, the average rate, the covenant buffer, the share of fixed rates, the volume and term of reserve lines, as well as alternative refinancing options (bank/market/private debt) .
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