The restructuring industry is keeping tabs on the domestic and global political climate as it looks ahead to 2019 — specifically, the trade war and expected increases in interest rates, WSJ Pro Bankruptcy reported. Since 2016, when Donald Trump won the presidential election, uncertainty stemming from politics has remained the dominant theme when looking ahead in the restructuring industry. While that’s the constant, the reasons for uncertainty have changed over the past few years. The effect of tariffs on certain industries should cause a spike in restructuring activity, especially if interest rates continue to creep up, industry experts told WSJ Pro Bankruptcy. While there’s been a reprieve on the imposition of a final round of tariffs on Chinese exports to the U.S. — President Trump and Chinese counterpart President Xi Jinping agreed in December to a 90-day tariff truce — the continued uncertainty looms over U.S. companies. To be sure, while these issues look to be “creating a perfect storm” for a wave of restructurings, many issues “could also dissipate if there’s a deal with China,” said Jeffrey Pomerantz, partner at Pachulski Stang Ziehl & Jones. Continued volatility in the stock market could further pressure companies in 2019. Between the general economic uncertainty and the sharp gyrations in the stock market, sentiment is fraying in the debt markets, said Bill Derrough, global co-head of restructuring and recapitalization at Moelis & Co., as well as Douglas Foley, a restructuring partner at McGuireWoods LLP.
