A large number of New Zealand's top 50 listed companies tapped up their banks for financial support through covenant waivers and facility limit increases during the worst of the nationwide Covid lockdown last year.
But many didn't end up needing it as revenues recovered much faster than they expected, a report by law firm Chapman Tripp has revealed.
Chapman Tripp partner Cathryn Barber said while some companies were in breach of their banking covenants and had to act quickly, others were looking to cushion themselves against potential future breaches.
"This time last year there was so much uncertainty in the economy so companies rushed to raise capital and get waivers to shore up their balance sheets which was a really sensible thing to do.
"But for a lot of them they have found it wasn't necessary - they have come through unscathed and I know a lot of companies that got waivers haven't ended up relying on them because their trading has improved much more than they had expected."
Barber said where the majority of creditors were solely banks the waiver process had tended to be straightforward as banks sought to support their customers, although those in the tourism and retail sectors faced tougher questioning and reporting requirements.
"We haven't seen a wave of insolvencies which I think says something that the banks have been supportive and are taking their time on these things."
But in some cases, she said, banks had required companies to raise equity to bolster their balance sheets.
Between March and July last year 14 companies raised capital in excess of $5m, of which nine were in the top 50 listed companies.
"There will be a point for the banks where they are not going to support some companies the longer this drags on. But certainly through lockdowns last year they were generally supportive."
Barber said most of the major listed companies had a reasonable dependence on bank debt and if the banks ceased to be supportive it was difficult to replace that bank debt.
But she expected it to be more small and medium-sized businesses and those industries directly impacted by Covid that would face potential insolvency from banks pulling their support.
"It's inevitable you will see some tourism, hospitality, some retail insolvencies in some areas because there is just a limit to how long those companies can survive the uncertainty and the lack of tourism."
The report revealed companies with a range of creditors found it more difficult to get their financing arrangements changed as it was tougher getting a majority to agree to the same terms.
Companies with US private placement funding found it took longer to find solutions than those who had funding through the banks.
Across the top 50 companies secured bank debt rose to $29 billion in 2020, up from $26b in 2019, while unsecured bank debt fell from $18b to $16b.
Companies undertaking bond offers were absent from the market in the first half of 2020 but returned in the second half with eight companies raising a total of $1.4b between August and December.
That saw total bond issuance fall from $1.674b in 2019.
Barber said she expected to see more bond capital raising this year and less equity raising.
"I think, from an equity perspective, we will probably see less activity than we did last year. Last year was a particularly busy year on the equity side because so many companies wanted to strengthen their balance sheets given the uncertainty of Covid.
"There are a lot of quite strong balance sheets out there at the moment. But having said that there is still quite a lot of money looking for a place to invest and the people who are raising seem to be getting good support and pretty good pricing."
She pointed to Contact Energy which raised money recently and was heavily oversubscribed.
Barber said it expected to see a lot more bond issues coming this year.
"We certainly think we will see a lot more this year just because pricing is favourable, the ability to get the longer tenor - a bit of diversity in funding, and for some of the listed companies it is also about expanding their investor base so they have more name recognition out there and more interested investors."
She said the potential for interest rates to rise next year also encouraged companies to undertake bond offers before that happened and they had to pay investors a higher interest rate.
"If you are locking in five-, six- or seven-year money which is what these bond issuances tend to be you want to do that at the lowest point in the market. I think there is an expectation that interest rates will rise at some point, maybe not this year but maybe next year so there are certainly companies looking at taking advantage of that now. And investors can get so little in the bank they are pretty keen for alternatives at the moment - it is sort of the perfect storm."