Private Debt Markets 2017

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  • The triumph of diversity

    The widely admired US private placement market has inspired the development and growth of private debt markets in Europe. But hopes of replicating in Europe the US model, governed by regulation and convention, of a single market with one set of documents, have been pushed back. As Jon Hay reports, the market now looks headed towards a more varied ecosystem.

  • Europe and its drive for more PPs: quo vadis?

    Europe’s Capital Markets Union project was supposed to place a regulatory rocket underneath the region’s private debt markets. But it has been slow work so far. What are the next steps for official support of the asset class? Owen Sanderson reports.

  • Broadening popularity brings Schuldschein its day in the sun

    Schuldschein issuance surged to a record high in 2016, as issuers and investors from across the world flocked to a private market with deep pools of investors, flexible formats and straightforward documentation. With the variety of issuers growing all the time, the Schuldschein is fast becoming Europe’s defining private placement product, writes Silas Brown.

  • Schuldschein banks must keep quality up as money floods in

    Foreign investors flocking to the Schuldschein market are drawing in issuers and forcing margins lower. As demand from overseas drives the swelling supply, Silas Brown asks: will the market be able to preserve its traditional strengths as it accommodates new investors?

  • German market takes on increasingly international hue

    The Schuldschein market attracts an increasingly international clientele. A host of foreign borrowers has been paying trips to this once clubby German market to enjoy a pleasant cocktail of light documentation, cheap funding and a deep pool of investors — many of which are also international. Silas Brown reports.

  • Schuldschein’s critical mass draws issuers and investors

    The attraction for companies of having some private debt that is neither loan nor public bond is now well established — but the market that is reaping much of the deal flow from that trend is the Schuldschein. New investors are flocking to it, and so are issuers, even though bank loans are freely available to many.

  • Crowded house: USPP fan base grows despite foreign rivals

    While the large US insurance companies remain the bedrock of the US private placement investor base, slim pickings elsewhere in the capital markets are pushing other kinds of investors to look at the product. But with demand for paper already far outweighing supply, market participants do not necessarily see this as a boon. Richard Metcalf reports.

  • Raising the USPP flag overseas

    Those who work in the US private placement market, as it is often referred to, say this is a misnomer. They prefer ‘traditional’ or ‘global’ private placement market and, while the European challenge may be increasing, the numbers suggest they have a point. Richard Metcalf reports.

  • PPs become increasingly well honed tool for infrastructure

    The role of the US private placement market in infrastructure project finance has expanded in recent years as investors have become more accommodating, competing with traditional sources of project finance in an effort to place vast amounts of capital amid scarce supply and low rates. Richard Metcalf reports.

  • Euro PPs: no tipping point, but market is growing

    With big, powerful rivals including the syndicated loan market, the European private placement or Euro PP market has its work cut out to establish itself as a genuine alternative for companies looking to raise debt. However, its flexibility and growing institutional investor base mean there are plenty of grounds for optimism. Philip Moore reports.

  • Youthful Euro PP strives to prove it has come of age

    Quantitative easing has made investors’ lives hard, even outside public markets. As spread compression makes its way into private debt markets, even the most experienced buyers are finding it hard to source investments that pay enough yield.

  • MAR hampers companies’ approaches to private debt

    Regular public bond issuers are finding their access to some private placement products complicated by investors’ nervous interpretations of regulation. But an eager buy-side does exist in other pockets, reports Ross Lancaster.

  • USPP aims to keep innovating as the ‘R&D of capital markets’

    The US private placement market is famous for its stability and consistency. But beneath the surface, much is changing. Last year issuance hit a record of $65bn, even though deal flow from continental Europe ebbed.

  • UK private placements — avoiding splendid isolation

    Efforts to boost the UK’s private placement market are making it easier than ever for borrowers to access non-bank finance. But for some, the UK private placement market should be reaching for greater union with its European counterparts, even as Brexit wrenches Britain and the EU further apart. David Bell reports.

  • Flexibility helps private debt hold its own in a world of QE

    London sits at the intersection of several private debt markets: the US private placement, Euro PPs, the Schuldschein, Euro medium term notes and direct lending. Each is different, but all exist in the same economic environment, in which banks are eager to lend and pricing in the public bond market is highly attractive to issuers.

  • Unitranche faces tough test as it hunts first €1bn deal

    Unitranche funds are hauling in money, even though lending spreads have come down a long way. At a time of exceptional conditions for borrowers in the syndicated leveraged loan market, unitranche lenders are still finding deals to do. Speed is in their favour — and wider market volatility this year may also play into their hands. Max Bower reports.

  • MTNs still providing value under pressure from ECB

    Corporate medium term note issuance has been dwindling, as borrowers have been sucked away by more attractive sources of financing. But MTNs still have their own appeal, providing financing in tenors and currencies not easily accessible through other means. Lewis McLellan reports.

  • A brave new world for PPs: digitalising private debt

    The private debt markets may well be regarded as the final frontier for technology’s appropriation of the world of capital flows. After all, how can such a bespoke sector — reliant on face-to-face communication to tweak and nuance deals to suit issuer and investor — ever be run by machines? But after scratching below the surface, Craig McGlashan finds several areas where the robots may well be taking over.

  • Debt advisers: helpful guides or another layer of intermediation?

    Specialist advisers are playing an increasingly important role in debt markets, especially the private markets. They add another layer between creditor and borrower, but issuers believe they more than pay their way, intermediating an illiquid and opaque market and making sure borrowers, some of them in the market for the first time, can achieve their goals. Debt advisers can be two ex-bankers and a telephone, or may be housed in some of the largest and grandest professional services firms on the planet. What’s the future of the industry? Owen Sanderson finds out.

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