SSD agents urge price widening
Schuldschein arrangers have been telling prospective borrowers to make spread ranges more attractive for lenders, if they would like the full attention of the market. With over 20 deals in the market, smaller lenders have to choose which credits to work on, often at first glance — and will be far more likely to ignore any borrower that does not offer good margins.
The Schuldschein market has had a phenomenal few months, with upwards of 30 borrowers, from Germany and abroad, raising debt. But for the traditional lenders, the German cooperative and savings banks, the bustle is sometimes hard to manage.
“When the market’s too busy, for us it’s a shame,” said an investor from a German savings bank. “We are a three-man team, and we don’t have the manpower to cope with the deal flow.”
The investor said he often had to instruct his team at a very early stage which borrowers to spend time working on. “Often it’s to do with price, and also sector and region,” he said.
Three arrangers have told GlobalCapital they have recommended to prospective borrowers widening their pricing by 10bp to 20bp, to secure the market’s full attention.
“The market’s very tight as it is, so the pricing would still be attractive,” said one of the arrangers in Frankfurt. “You have to try to separate yourself from the crowd, otherwise you may be lost in the noise.”