The Bank of Japan's rate hike is expected to spill over into the M&A market, with interest payments set to rise on leveraged buyout (LBO) financing used by companies to raise acquisition funding from banks. Banks may face a situation in which they must assess borrowers' suitability more rigorously.
The Bank of Japan's rate hike is expected to affect bank financing as a means of raising acquisition funding, particularly leveraged buyout (LBO) financing, and rising funding costs could affect the viability of LBO transactions.
While higher interest payments could increase companies' financial burden, banks are expected to place greater importance on assessing borrowers' repayment capacity and business prospects. This is being described as a situation in which banks' credit judgment will be tested.