Welcome
We are excited to introduce ourselves to you and our unique way of working together. In order to provide you with the optimal experience, how would you describe yourself?
https://www.prudentialprivatecapital.com/posts/video-what-is-long-term-financing
https://www.pricoaprivatecapital.com/posts/video-what-is-long-term-financing

Video: What is Long-Term Financing?

July 23, 2019
Related topics
Prudential Capital’s Josh Shipley, Ed Jolly, Mitch Reed and Ashley Dexter explain ‘long-term financing’ and how many companies utilize this patient and strategic form of funding.

Long-term financing is any sort of debt financing that would be repaid after about five years. Because it has a longer tenor, long-term financing is a more permanent layer of capital in a company's capital structure. Also, it often carries a fixed rate and is typically raised on a non-amortizing basis. Consequently, long-term financing tends to be viewed and used as a patient and more strategic type of capital in a company's capital structure, designed to match against longer-term initiatives.

It is often considered prudent to utilize some long-term financing in conjunction with short-term financing, using the long-term financing to match the life of the debt, or liabilities, with the life of the investment, or assets. If a company has a major capital spending program, such as building a manufacturing facility, or they’re making an acquisition that might have a longer payback period, it is often appropriate to use a longer-term debt instrument to finance that project.

Companies can also utilize long-term financing to layer different maturities into their capital structure, which can reduce the refinancing risk associated with having only short-term financing. Additionally, the fixed rate that is typically associated with long-term financing gives companies the ability to lock in borrowing cost and reduce interest rate risk as well as balance sheet risk.

Another reason companies may want to introduce long-term financing into their capital structure is to prepare for market volatility. For companies that are 100% reliant on one funding source, such as the bank market, their access to capital can be strained if there are constraints on that market, whether for regulatory reasons or due to the health of that market.

Companies can look to the capital markets, such as the public bond or private placement markets, to raise long-term financing. Prudential Private Capital  has been providing long-term financing for more than 75 years, being there for companies when things are good and when things aren't so good. We have the experience to help businesses determine what they might need from a capital perspective and what opportunities there may be, with a long-term focus.

This document does not take into account individual circumstances, objectives or needs, nor is it intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services.  This document does not constitute investment advice and should not be used solely as the basis for any investment decision.
This article represents the views, opinions and recommendations of the author(s) regarding the economic conditions, asset classes, securities, issuers or financial instruments referenced herein. Distribution of this information to any person other than the person to whom it was originally delivered is unauthorized, and any reproduction of these materials, in whole or in part, or the divulgence of any of the contents hereof, without prior consent of prudential private capital is prohibited. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. Prudential private capital has no obligation to update any or all of such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy or accept responsibility for errors. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services and should not be used as the basis for any investment decision. Past performance is no guarantee or reliable indicator of future results. No liability whatsoever is accepted for any loss (whether direct, indirect, or consequential) that may arise from any use of the information contained in or derived from this report. Prudential private capital and its affiliates may make investment decisions that are inconsistent with the recommendations or views expressed herein, including for proprietary accounts of prudential private capital or its affiliates.
The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients or prospects. No determination has been made regarding the suitability of any securities, financial instruments or strategies for particular clients or prospects. For any securities or financial instruments mentioned herein, the recipient(s) of this report must make its own independent decisions.
< Back
Stay in the know
Receive our latest perspectives on business issues, industry trends, and economic insights.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Related Articles

Two men discussing business at an eveny
Partner Story: White Castle
June 22, 2020
Partner Story
Long-Term Financing
Food & beverage
See more
Image of people having a discussion
Video: How the Private Market Has Responded During Times of Capital Market Volatility
August 22, 2018
Private placement
See more