This week the loan market got itself in a tizz at the prospect of ”flexit” clauses, which stipulate a deal will be structured with a unique pricing flex in case Britain votes to leave the EU in June. Ideas were bandied around that there could be a move by as much as 50bp in the event of a so-called Brexit.
But don’t worry — the flexits won’t happen. Nobody is going to introduce a flex clause in a deal because of an event happening in six weeks’ time. The dear old loan market moves at too glacial a pace. Six weeks away might as well be tomorrow.
By the time the docs have been drawn up with a smart new flex clause in them, the referendum will have been and gone and the clause will be redundant.
And as for those who were planning deals months ago, the idea that they might have arranged a deal with a great big clunky flex in it just for the sake of expediency is absurd.
Any level headed banker would wait for the outcome of the vote rather than build in an awkward flex clause.
It’s fair to say that few understand the implications of a UK exit from the EU, but that’s no cause for fear mongering in the loan market. Just keep calm and think of July.