The Equipment Leasing & Finance Foundation (the Foundation) releases the October 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 55.0, easing from the September index of 56.5 and steady with pre-COVID index levels.
The Foundation also releases highlights of the COVID-19 Impact Survey of the Equipment Finance Industry, a monthly survey of industry leaders designed to track the impact of the coronavirus pandemic on the equipment finance industry. Survey responses were collected from October 1-12 on topics including payments deferrals, defaults and staff analysis. Some 56% of companies expect that the default rate will be greater in 2020 than in 2019, down from 73% last month; 35% expect it to be the same compared to 20% in September, and 9% expect it to be lower compared to 7% last month. Only 7% of lenders reported having more than 10% of their portfolio now under deferral, down from 15% of lenders last month.
When asked to what extent regulatory and/or funding source pressures are limiting companies’ willingness or ability to provide deferrals now, 66% responded “not at all,” 29% answered “somewhat,” and 4% indicated “substantially.” The largest percentage of respondents (58%) have 0.01-4.99% of dollars outstanding currently under payment deferral in their owned portfolio.
When asked about the outlook for the future, MCI-EFI survey respondent Bruce J. Winter, president, FSG Capital, Inc., says, “It's now obvious that the economic fallout from this pandemic will continue for the foreseeable future and there will be no quick return to pre-COVID 19 economic metrics. While many of our clients have adapted to a new normal, others have spent their government stimulus and are at risk of closure without additional support. The resiliency of the equipment finance industry is without doubt, but as with other cycles, there will be winners and losers. In this cycle, those lucky enough to have little or no exposure to threatened industries will be the winners, while those with too much exposure to these same segments have no choice but to deal with significant stress.”
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