Publications

- October 1, 2016: Vol. 10, Number 09

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As good as it gets: Is the European private debt market ready for the next challenge

by Peter Hobbs, Niels Bodenheim and Dharmy Rai

A combination of factors has propelled  private debt to the forefront of investors’ wish lists, particularly across Europe.

Prior to the global financial crisis, there was limited scope for European private debt, given the preva-lence of banking finance. This has all changed in the decade since the crisis, with increasing bank regulation and concerns over capital adequacy enabling the growth of the “private lending” that had been long established as an attractive asset class in the United States. The reduced competition came at a time of increasing demand from borrowers. Although leverage levels reduced following the financial crisis, the economic and real asset class recovery created significant demand for finance, albeit at lower leverage levels.

More recently, macroeconomic circumstances have accelerated investor demand for private debt. The “lower-for-longer” scenario for global interest rates based on weak economic growth, low infla-tion and continued m

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