Demand grows for European private placement
Demand is growing for a European private placement market in the absence of additional financing for corporates, a firm comprised of experts on debt capital markets has said.
A fully-functioning European private placement market could add over €25bn of extra funding for corporates, according to a new report by Bishopsfield Capital Partners LLP.
The firm provides arranging, structuring, and advisory services to European structured finance transactions and investment partnerships, and claims opportunity exists for the creation of a European private placement market.
Private placements – the issuance of unrated and privately negotiated medium to long term debt with institutional investors – have traditionally been the preserve of US capital markets.
European companies currently have to tap the US market for additional finance, bringing with it dollar currency risk.
Typically, non-US borrowers account for 45-55% of private placement issuance, reflecting demand for a European market.
Steve Curry, Partner at Bishopsfield Capital Partners, said a European private placement market would provide much needed extra funding capacity, as well as an attractive asset class for yield hungry investors.
So far, there has been little momentum for the creation of a regional private placement market. It was expected the single currency and the development of public bond markets would stimulate it.