This week we continue our conversation with Barry Bobrow, Managing Director, head of Loan Sales and Syndications, Wells Fargo Capital Finance. Wells Fargo Capital Finance is one of the largest providers of asset-based loans to large, middle market and small companies in the United States.
Second of two parts – View part one
The Lead Left: How about favored industries right now?
Barry Bobrow: Thomson Reuters reports that the number one industry for ABL is retail. That represents about a third of the syndicated loan market. Retailers, given their large base of easily liquidated assets, work well in our business. Other sectors where ABL continues to see activity includes metals, chemicals, and transportation, which of course are more cyclical. Energy is a strong ABL sector; we don’t lend against reserves, but are pretty comfortable with the commodity in storage and pipelines, and can lend against fixed assets.
TLL: Speaking of energy, how has the fall of oil prices impacted ABL?
BB: ABL is an ideal structure to use since the borrowing base adapts automatically to falling prices of your inventory. You just need to track values carefully. I would expect some of the stronger oil-field service businesses may migrate to ABL.