Q2 2016 Market Update

Marlborough Partners, the independent debt advisory firm, today published its report on the European leveraged finance market for Q2 2016.

The report, analysing data from a number of sources, shows European leveraged loan volumes slightly down for the quarter compared to prior year (4%) with a reduction in UK leveraged loan volumes accounting for the fall (29% down on prior year). This was primarily due to non-sponsor and refinancing activity being withheld in anticipation of the EU referendum in the UK.

The European high yield market grew in Q2’16 as oil prices recovered and concerns over Chinese economic growth abated, with volumes more than twice as high as the first quarter of the year (€16.9bn vs. €7.1bn). However, similar its loan market counterpart, European high yield volumes were down on prior year (9%).

The report also reflected on the impact of Brexit on the UK mid-market where there has been some positive momentum in recent weeks through the signing of transactions such as the sponsor backed acquisitions of Morrison Utility Services and Liberation Group. In addition, Marlborough commented on the support of the UK banking community where they have been the recipient (on behalf of their clients) of numerous final credit approvals broadly in line with pre Brexit terms from all the key market participants.

Marlborough Managing Partner, David Parker, said: “Brexit has had a significant impact on the UK financing market, particularly in terms of eroding the confidence of sellers in bringing deals to market. That being said there are already green shoots given the mix of recent deals getting done and the strong commitment of the UK banking community which is helping to improve investor sentiment day by day”.

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