Green, Private, Hybrid: The New Faces of Corporate Debt

Why CFOs and Founders Are Rethinking Capital Strategies

Central banks may be cutting policy rates, but the cost of borrowing remains stubbornly high. UK gilt yields have surged to multi-decade highs, while European corporates face a daunting refinancing wall as 2026 approaches. In Asia, Singapore is positioning itself as a hub for sustainable and concessional financing, with green initiatives drawing global attention. 

This combination of macro headwinds and structural shifts is forcing finance leaders to rethink debt not as a “last resort” but as a strategic instrument. In this blog, we break down the key trends shaping September 2025 — and how companies are responding.

Elevated Borrowing Costs Are the New Normal

For CFOs, the era of ultra-cheap money is over — and strategies must adapt.

• United Kingdom: Long-dated gilt yields are at their highest in nearly three decades, reflecting investor caution and government borrowing needs. In response, issuers are shortening maturities to avoid locking in historically high long-end costs. Treasurers are increasingly relying on derivative hedges to smooth out volatility in interest payments.
• European Union: With a heavy maturity wall looming in 2026–2027, corporates are refinancing earlier and exploring alternatives. Private credit and hybrid structures — blending senior and subordinated debt — are gaining traction, offering greater flexibility and tailored repayment profiles.

This is not the time for complacency. Those who delay refinancing risk restrictive terms and constrained liquidity. The most proactive CFOs are already testing market appetite, engaging lenders, and securing bespoke facilities before conditions tighten further.

Green & Sustainable Financing Momentum

One of the few areas showing strong momentum is sustainable finance. Investor appetite for ESG-aligned instruments remains resilient, even as traditional markets tighten. 

Singapore’s central bank has raised $510 million under the Green Investments Partnership, designed to channel capital into renewable energy, transport, and storage projects across Asia. This move underscores Singapore’s ambition to become a regional hub for sustainable finance. 

European development banks are redirecting capital flows into climate and healthcare-linked projects, reflecting both policy goals and investor demand for stable, purpose-driven returns. 

For founders and CFOs, the message is clear: sustainability-linked debt can unlock real advantages. Concessional pricing, investor diversification, and reputational benefits are all on the table. In many cases, ESG financing is not just cheaper but strategically aligned with customer and stakeholder expectations. Companies that ignore this trend risk missing out on both capital and competitive positioning.

From Equity-Only to Hybrid Funding

The start-up funding playbook is also being rewritten. Once reliant almost exclusively on venture capital, young companies are now embracing hybrid capital stacks.

• Government grants and incentive schemes provide non-dilutive funding, especially for innovation-heavy industries.
• Crowdfunding platforms are helping consumer-facing ventures tap their communities for early-stage capital.
• Debt financing — from venture debt to asset-backed loans — is increasingly common, with over 56% of early-stage technology ventures now using loans in their capital mix.

The benefit? Reduced dilution, stronger control, and more strategic optionality. Hybrid funding is increasingly seen as a sign of financial sophistication rather than financial distress.

Founder Financial Savvy as a Differentiator

In today’s market, access to capital depends as much on financial literacy as on business performance. Lenders want to partner with founders who understand their terms. 

Founders who can negotiate covenants, structure repayments, and balance risk are far more likely to secure favourable deals. Beyond access, this knowledge translates into lower costs of capital and greater resilience in volatile markets. 

Increasingly, investors and lenders view founder financial sophistication as a leading indicator of long-term success. Just as product-market fit is critical for growth, debt-market fit — the ability to align borrowing with business strategy — is becoming a key differentiator.

Corporate Appetite & Strategic Behaviour

Large corporates are making equally significant adjustments.

• In the UK and EU, project-linked debt in infrastructure and energy continues to attract lenders thanks to predictable cash flows. Yet, with long-end borrowing costs proving prohibitive, many CFOs are choosing private credit and hybrid structures that allow for tailored repayment schedules and more flexible covenants.
• In Singapore and broader Asia, corporates are forging partnerships with concessional lenders and state-backed funds. These structures not only reduce financing costs but also align businesses with government priorities, such as green transition and innovation funding.

This shows a clear evolution in mindset: companies are no longer simply chasing the cheapest capital. Instead, they are prioritising flexibility, strategic alignment, and resilience, ensuring their financing structures can withstand uncertain economic cycles.

Tailored Debt Advisory Matters More Than Ever

At Fuse Capital, our experience confirms one thing: every sector requires a unique debt strategy.

• Agritech & Biotech: With long R&D timelines and uncertain revenue profiles, these sectors benefit from staged financing with deferred repayment terms.
• Fintech: Fast-moving innovation cycles and regulatory scrutiny call for flexible working capital and hybrid debt solutions.
• Healthcare & Energy: Both capital-heavy industries, they require creative repayment structures and strong lender syndicates to balance upfront investment with long-term cash flows. 

Our role is to combine sector knowledge with a global lender network, enabling businesses to secure £2–25M in bespoke private debt. The focus is always on structuring debt that fuels growth while protecting control and long-term equity value.

The Bottom Line

Private credit is no longer niche — it is mainstream. For SMEs and finance leaders, this shift creates significant opportunities:

• Faster, more bespoke funding that matches business cycles and growth plans.
• Partnership-driven lending, where lenders act as long-term allies rather than transactional providers.
• Access to a broader toolkit that spans senior, subordinated, hybrid, and asset-backed structures.

The strategic use of debt has become a competitive advantage. Companies that treat financing as part of their growth strategy, not just a back-office function, are positioning themselves to thrive in an era of higher rates and greater complexity. 

Written by Reynold Paul