There are two aspects to this ...
Either:
If the economy improves, interest rates will rise ... there will be pressure on SCF margins.
Or:
If the economy dips, interest rates will not rise, but defaults in the receivables will rise.
If I were Sandy Maier, out of the two, I'd actually prefer to face the second issue, rather than the first. The basic reason is that I will not be seeking to grow my loan book until the very end of the restructure process. He is not looking to chase new business and he has already had a good hard look at the business he already has. If he can stay static, in business size, during a "dip" - this buys him time to complete the capital adequacy restructure. An interest rate rise takes time away from him.
Bookmarks