Report: Less Than Half of Long-Term Commercial Credit Renewals Repriced

April 23, 2019

About 57% of banks' commercial credit renewals for terms of three years or longer are being rolled over at existing prices rather than being repriced, according to survey research released yesterday by PrecisionLender. The share of repriced deals is smaller for shorter maturities. Meanwhile, just over half of the largest deals—valued at $25 million and up—are being repriced.

Many deals are rolled over at existing pricing even when the credit becomes riskier. “About three-quarters of downgrades were rolled over at existing pricing levels,” said PrecisionLender SVP Gita Thollesson. “Quite often, when renewal spreads are changed, often they’re moved in the opposite direction of risk migration.”

For credits on which risk ratings remain unchanged, many lenders still reduce spreads—21% for deals of less than $5 million and 35% for deals valued at over $5 million, according to the survey. “Pricing has eroded in the market,” Thollesson said. “Customer retention is the main issue.” Read more.

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