Refinancing in a higher-for-longer market: Five questions to ask before your debt matures

For many Australian businesses, their next refinancing may look very different from the last.

Businesses that raised or refinanced debt during a lower-rate environment are now approaching maturity with a different serviceability equation. Although earnings may have grown, they may not have increased enough to fully offset higher funding costs. Waiting for rates to fall while facing an imminent debt maturity is not a recommended refinancing strategy.

The Reserve Bank of Australia (RBA) now has the cash rate at 4.60 per cent, as of 29 September, following three earlier increases during 2026. Its highest level since 2011. Its September Outlook said inflation remains elevated and the RBA also identified persistent domestic capacity pressures and global cost pressures as upside risks to inflation.

That creates a practical issue for borrowers: What happens if your refinancing arrives before meaningful rate relief does?

Five questions businesses should be asking

Rather than trying to predict the exact timing of interest rate movements, businesses approaching a refinancing should ask five questions.

1. What debt matures in the next 18 months?
   Refinancing conversations are generally easier when they begin early. Understanding upcoming maturities, extension options and potential pressure points give management more room to respond.
2. Can the business comfortably service its debt if rates remain elevated?
   Test the numbers against today’s environment, and add in an additional buffer of 0.50 per cent, rather than assuming rates will fall before the debt matures. The RBA itself says financial conditions are restrictive and inflation is expected to decline only gradually.
3. Is the current lender still aligned with the business’s strategy?
   The right funding partner depends on what comes next for the business. Expansion, acquisitions, development, capital expenditure or an eventual exit can require very different funding structures and time horizons. Some lenders will have shorter time expectations than the business requires.

4. Could testing the market improve the outcome?
   Going to market isn’t necessarily about replacing an incumbent lender. It can help establish whether pricing, structure, covenants, flexibility and execution certainty remain competitive.
5. Are the business information and systems genuinely lender-ready?
   Even strong businesses can experience difficult refinancing processes if their information is not accurate and trustworthy. Quality forecasts, cash flows, sensitivities, debt schedules and a clear explanation of strategy can materially improve the quality of a funding conversation.

And what about switching to private credit?

Private credit has significantly broadened the funding options available to Australian businesses. It can provide speed, flexibility, and an appetite for transactions that may fall outside traditional bank parameters. However, ‘available capital’ shouldn’t automatically be assumed to mean ‘committed capital’.

Borrowers should understand where a lender’s capital comes from, whether funding is genuinely available, the lender’s expected hold period and exit strategy, and what happens if circumstances change.

These considerations are particularly important when private credit is intended to provide transitional funding before the business refinances with a traditional bank, either once a project is completed or as its risk profile changes.

The opportunity lies in preparation, not prediction

Businesses do not need to be able to forecast the RBA’s next move to make a sensible funding decision.

For those with debt maturing over the next 12 to 18 months, the priority should be understanding what the business looks like to a lender today, and whether its funding structure remains appropriate for the current environment and its future strategy.

The conversation can be surprisingly simple.

What matures? Can we service it? Is our lender still right for us? Should we test the market? And are we ready to do it?

Asking these questions can reveal potential issues and create more options before refinancing becomes urgent.

How BDO can help

BDO’s debt advisory team helps businesses assess their refinancing position, combining hands-on transaction experience with extensive lender networks to help clients prepare, negotiate and secure financing solutions that support their strategic objectives.