Unul dintre efectele crizei prin care trece sistemul bancar european este acela ca modelul de finantare ce sta la baza economiei americane este, treptat, preluat si in Europa. In America – circa 3 sferturi din finantarea acordata agentilor economici este prelevata din piata de capital, si doar un sfert este furnizata de banci … in Europa, lucrurile stau exact invers: 3 sferturi din finantarea companiilor este asigurata de banci, si doar un sfert prin piata de capital. Lucrurile tind insa sa se schimbe in Europa, unde, fondurile de investitii incep sa ofere finantare companiilor, ocolindu-se astfel bancile.
By Michael Stothard
Mario Draghi may have boosted the credit markets and enabled large companies to borrow at all-time low rates. But the European Central Bank president has yet to solve the funding problems of many eurozone businesses.
His pledge to do “whatever it takes” to save the euro has failed, so far, to reverse the trend of banks lending less to small and medium-sized companies, which make up more than 99 per cent of European companies and employ 72 per cent of the workforce.
European banks are expected to shrink their balance sheets by up to €2tn – or about 7 per cent of their assets – by 2014, according to the International Monetary Fund. Much of this shrinkage is likely to come from reduced lending, with the rest from asset sales.
But asset managers are riding to the rescue. A growing number are setting up funds to lend relatively small sums of money directly to European companies that are finding it difficult to borrow from traditional lenders.
“The size of the European direct lending market is shaping up to be quite large,” says Benoit Durteste, managing director at Intermediate Capital Group. “And in a sense it has to be. With banks withdrawing something has to fill the gap.”
There has been a steady trickle of direct lending funds emerging in the last five years, with asset managers such as M&G starting up as early as 2009. There are signs now that the amount of money being put to work is picking up pace.
Bluebay has this year raised €500m of a €750m fund to lend directly to European corporates, completely bypassing the traditional banks. Alcentra is also in the process of raising a €500m European direct lending fund.
M&G announced that it had raised its second UK Companies Financing Fund with £450m, topped up by £200m from the UK government. Separately insurance group Axa has linked up with Société Générale to lend to midsized French corporates.
Last week Axa signed off on a €220m loan facility to private equity firm PAI Partners to fund its acquisition of industrial supplies distributor IPH Group, which was Europe’s largest ever single tranche financing deal.
Appetite among investors to invest in new funds making senior loans has been helped by the wider credit markets, according to analysts. As yields for debt in the public market hit an all-time low this year, many asset managers have been looking elsewhere for riskier assets.
Direct lending funds to middle-market companies can expect an annual return of 9 to 12 per cent, more than the 7 to 9 per cent offered by a syndicated loan, according to Alcentra. This is also more than the 6 per cent in the high-yield bond markets and the just over 3 per cent for investment grade debt.
“Public debt yields have compressed immensely on the back of central bank action and other technical factors, but yields in the private market remain very robust as issues relating to bank deleveraging remain,” says Anthony Fobel, head of private lending at BlueBay Asset Management. “That is why there is such significant demand for direct lending funds.”
Another factor that has encouraged direct lending this year has been the run-off of European collateralised loan obligations, securitised loan vehicles created before the financial crisis that once – along with banks – held the vast majority of corporate loans. Most of them will not be able to buy new loans by the end of this year.
The growth of direct lending to help fill this gap comes amid hopes Europe is moving more towards US-style corporate financing. In Europe three-quarters of funding comes from banks and the rest from the markets. In the US the opposite is true.
Yet, while there are hopes for growth in the direct lending market, it is starting from a very low base and there are doubts that it will do that much to offset the estimated hundreds of billions of euros of bank deleveraging expected over coming years.
“The market is still developing,” says Mark Hutchinson, head of alternative credit at M&G, adding that any change is likely to be slow.
“You cannot underestimate the change in mentality that is required from total reliance on the banks.”
And the market could also be derailed by suspicious regulators, many of whom are worried about the problems of the unregulated so-called “shadow banking” market growing too large. Rating agencies have also expressed concern about the wider risks.
“There is potential for asset managers and insurers to get into trouble if they overextend themselves,” says Yaron Ernst, managing director of Moody’s Managed Investments Group. “Some players getting into this market might extend credit into areas where they have less experience.”