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Non-bank debt finance under spotlight at German M&A and Private Equity Forum

18 March 2015

Düsseldorf– Mergermarket hosts its 6th German M&A and Private Equity forum today in partnership with Debtwire, the leading provider of intelligence, analysis and data on distressed debt, leveraged finance and asset backed markets. The role of direct lending funds in the LBO market and the current structure of the high yield market are some of the key themes to be discussed today.

With EUR 19 billion of European high yield issuance in 2015 so far, the forecast is for another record volume year. Credit Suisse expects HY issuance to hit EUR125BN (up from EUR103BN in 2014) and loan issuance to hit EUR110BN (up from EUR89BN in 2014).

Sarah Syed, DACH reporter at Debtwire states: “An increased number of direct lending funds are establishing themselves in the German loan market as demand for the product is increasing. There is a lot of liquidity in the market and traditional banking sources will need to become more competitive in their appetite to lend to compete with the flexible structures offered by direct lenders”

The start of 2015 has been quiet in Germany with the loan figures for 2014 flattered by a EUR 3bn deal for Heidelberg Cement, according to Debtwire Analytics data. Loan issuance on the other hand has been eclipsed by bond issuance in the year to date. The last full year where bonds ended ahead was 2011.

“The European high yield market was a tough environment in the second half of 2014, with little primary issuance, news-driven sell-offs and choppy trading, which has caused investors to be cautious in the year to date. But financing costs remain at all-time lows and money keeps pushing into the high yield market,” says Anneken Tappe, High-Yield reporter at Debtwire.

“There is a rise in the number of large cross-border transactions, and those with euro and dollar tranches in which the euro portion is seeing much stronger demand”, comments Mathew Cestar, Head of Leveraged Finance at Credit Suisse. “We expect the positive investing environment to continue as investors search for companies with skilled management, stable cash flows and strong credit stories.”

“Maximum volumes, low interest rates, easy covenants and great negotiating power on the corporate side gives borrowers unprecedented results during financing processes,” says Arno Fuchs, CEO of FCF Fox Corporate Finance.