ABFJ Podcast: The Comforts of Converting to Asset-Based Facilities

The economic upheaval of the COVID-19 pandemic has led some companies to convert their cash-flow based credit facilities to asset-based facilities.  In the ninth episode of ABF Journal’s COVID-19-focused podcast series, Ed Gately, head of asset-based finance at Mitsubishi UFJ Financial Group or MUFG, discussed this trend and the benefits of converting to an asset-based structure, including the level of comfort it provides to lenders due to collateral protection. Gately further explained why borrowers often stick with asset-based deals once they convert.  In addition, Gately said that after a rush in March and April, there has been a decline in drawdown requests in May. He also spoke about anti-cash hoarding provisions and changes in pricing terms, and speculated about the challenges created by a “new normal.”