Through the first half of the yr, €6.6bn (£5.56bn) of personal credit score amenities have been refinanced on the European broadly syndicated mortgage market.
Based on a bi-annual survey on European leveraged finance carried out by PitchBook LCD, there are a selection of the reason why corporations would possibly search out extra financing from the non-public credit score markets within the second half of the yr.
27 per cent of market members mentioned market volatility/execution certainty can be the driving issue behind refinancing; whereas 27 per cent cited the rising market depth; and an additional 27 per cent mentioned that the supply of payment-in-kind debt made non-public credit score extra interesting.
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One other 18 per cent mentioned flexibility of phrases can be the principle purpose why they’d select to refinance utilizing non-public credit score.
Elsewhere within the survey, 18 per cent of market members pointed to geopolitical volatility as the largest threat to leveraged credit score portfolio efficiency over the following six months. 15 per cent cited credit score high quality dangers because the second-biggest menace.
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In the meantime, one survey respondent mentioned that “new funds, particularly CLOs, are having so as to add some dangerous credit to their portfolios with a purpose to get the economics to work, which may end in poor efficiency going forwards if these credit score dangers should not correctly managed.”
The survey additionally discovered that 46 per cent of respondents consider that personal credit score allocations will improve within the second half of this yr, underlining the continued reputation of the asset class.
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