Rating agencies are growing increasingly concerned about European loan managers being able to reach their collateral targets after ramp up. "We do worry about it as it becomes more difficult to source assets and the influx of American managers isn't helping," said Anne Le Henaff, senior analyst at Moody's Investors Service.
Le Henaff, speaking at Information Management Network's Global ABS Summit last week in Barcelona, noted that the agency is rating more combination notes, which include a significant proportion of equity, making it all the more important to assess the impact on the rating of negative carry during the ramp-up period.
Mark Moffat, senior managing director for CDOs at Bear Stearns in London, noted it is now inevitable for a manager to have a 5% cash basket at any time due to the underlying inefficiencies of the loan market.
Managers in Europe, though, are set for a wave of massive deals to hit the market. These include the financings backing the buyout of Wind Telecomunicazioni--that includes approximately $11.7 billion of loans--and Amadeus Global Travel Distribution for ?4.3 billion. Additionally, deals are also in the works for Yellow Brick Road, Greek telecoms firm TIM Hellas, plastics maker Basell, and Ruhrgas Industries, which is being bought by CVC Capital Partners for ?1.5 billion.