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Marlborough Partners’ Q2 2018 Report

Marlborough Partners, the independent debt advisory firm, today published its report on the European leveraged finance market for Q2 2018.

The report, analysing data from a number of sources, shows UK leveraged loan volumes were €5.4bn in Q2‘18, 29.5% higher than the same period last year as strong issuance levels continued in 2018. These high issuance levels were driven by a marked increase in M&A activity which began towards the end of 2017 and then delivered consistent deal flow throughout H1’18. 84% of total loan deal activity in Q2’18 was driven by M&A, the highest proportion since Q3’11. The prevalence of M&A activity has driven slightly wider pricing, reflecting greater lender negotiating power on new money transactions as opposed to opportunistic repricings and refinancings.

The Q2 2018 Report also looks at the concentration of the lending landscape in Europe’s largest markets the UK and Germany. Markus Ehrler, Partner, said: “The leveraged lending landscape in Europe’s largest markets UK and Germany is characterised by both pan-European and local players. While debt funds are mostly pan-European, the banking landscape is diverse with domestic players playing an important role. The banking market in the UK is highly concentrated with only 6 banks accounting for 80% of all participations for LTM June 2018, while the German-speaking banking landscape in the mid-market is much more fragmented with 17 banks representing 80% of all participations.”

Marlborough Partners UK-DACH Quarterly Snapshot Q2-2018

For further information, please contact:

David Parker +44 (0)203 053 3601 djp@marlpar.com

About Marlborough Partners

Marlborough Partners, based in London, Frankfurt and Madrid, provides specialist, independent advice to private equity firms, portfolio companies and corporates, on sourcing and structuring debt and other non-equity finance.  Since 2003, the Marlborough team has advised on 245 completed transactions – from the simple to the highly complex – comprising over €50bn of primary market debt issuance, waivers and amendments and loan restructurings in eleven European jurisdictions. For further information, visit www.marlboroughpartners.com

Marlborough Partners’ Q1 2018 Report

Marlborough Partners, the independent debt advisory firm, today published its report on the European leveraged finance market for Q1 2018.

The report, analysing data from a number of sources, shows the UK significantly increased its share of the European Leveraged Loan market in the quarter with leveraged loan volumes in the UK of €13.9bn, greater than the three previous quarters combined. This was driven by an increase in average deal size, with several large landmark deals closing in the quarter. Issuance in the wider European Leveraged Loan market continues to track the record pace set in 2017 with total volumes marginally up on the same period last year (€35.7bn vs. €35.3bn). Despite yields widening, they are still close to historically low levels and the European high-yield market remains solid, hosting €19.6bn of bond volume in the quarter, which was down on the €24.9bn generated in Q1’17 but above Q3’17 levels.

The Q1 2018 Report also reflects on the evolution of the Private Debt market over the last 7 years. Marlborough Partner, Romain Cattet said: “Private debt has been one of the few success stories to emerge from the global financial crisis as debt fund managers filled the gap left by the shying away of traditional banks from riskier lending driven inter alia by higher capital requirements due to Basel II and subsequent iterations, and the Fed/ECB guidance on leveraged transactions. As the abundance of private debt funds increases so does the range of products they offer. These funds now come in many forms and employ a wide range of strategies with different risk/return profiles; their product suite extends well beyond the plain vanilla Unitranche. As banks remain risk averse and mono-product with limited ticket sizes, they are likely to continue to lose market share to these now well-established players.”

Marlborough Partners – UK & DACH Quarterly Snapshot – Q1 2018

For further information, please contact:

David Parker +44 (0)203 053 3601 djp@marlpar.com

About Marlborough Partners

Marlborough Partners, based in London and Frankfurt, provides specialist, independent advice to private equity firms, portfolio companies and corporates, on sourcing and structuring debt and other non-equity finance.  Since 2003, the Marlborough team has advised on 233 completed transactions – from the simple to the highly complex – comprising over €50bn of primary market debt issuance, waivers and amendments and loan restructurings in eleven European jurisdictions. For further information, visit www.marlboroughpartners.com

Marlborough Partners’ Q4 2017 Report

Marlborough Partners, the independent debt advisory firm, today published its report on the European Leveraged Finance market for Q4 2017.

The report, analysing data from a number of sources, shows European leveraged loan volumes stood at a post crisis high at €120bn, up 70% on 2016. High yield bond volumes were similarly robust in 2017 with €94bn issued representing a strong year for leveraged finance deal volumes.

The Q4 2017 Report also discusses some of the recent trends seen in the Private Debt market. 2017 was a fantastic year for private debt across the European landscape, with some of the largest private debt funds raised in Europe and new private lending strategies launched. In particular, the proliferation of super senior and unitranche structures (1st Loss / 2nd Loss structures) has seen a growing acceptance of private debt solutions across Europe.

Marlborough Managing Partner, Gurjit Bedi, said: “Private debts funds have dominated the European mid-market in a way not seen historically, they are now seen typically as the preferred primary financing option for many Sponsors.  In addition, notwithstanding the tight yields we have seen over 2017 in the loan markets, a number of credits which might have been suitable candidates for the TLB loan market have opted to go down the private debt route for a multitude of reasons.  Given the emerging step change of fund hurdles and different pools of capital being raised by these funds, for stellar credits we are expecting to see a pricing compression on 1st /2nd Loss structures, offering blended pricing close to where the Term loan B markets was 18 months ago”

Marlborough Partners – UK DACH Quarterly Snapshot – Q4 2017

For further information, please contact:

Gurjit Bedi, +44 (0)203 053 3606, gsb@marlpar.com

About Marlborough Partners

Marlborough Partners, based in London and Frankfurt, provides specialist, independent advice to private equity firms, portfolio companies and corporates, on sourcing and structuring debt and other non-equity finance.  Since 2003, the Marlborough team has advised on 228 completed transactions – from the simple to the highly complex – comprising over €57bn of primary market debt issuance, waivers and amendments and loan restructurings in 11 European jurisdictions. For further information, visit our website www.marlboroughpartners.com

Marlborough Partners’ Q3 2017 Report

Marlborough Partners, the independent debt advisory firm, today published its report on the European Leveraged Finance market for Q3 2017.

The report, analysing data from a number of sources, shows European leveraged loan volumes at Q3 stood at €85bn, up 71% YoY, with high yield bond volume for Q3 at €65.2bn which is significantly ahead of the YoY total of €43bn. These strong levels of volume have seen the recent trend of “too much money chasing too few deals” potentially beginning to reverse although questions remain as to whether this is likely to continue given the typical “lumpy” nature of leveraged finance volumes.

Finally, this edition of the Quarterly review also discusses how direct lending credit funds might behave in stressed scenarios. In the benign years that have followed the last credit cycle, while credit funds have rapidly grown market share, there has been a lack of stressed deals such that most funds remain untested. However, an uptick in stressed situations in 2017, driven largely by continued pressures in certain sectors such as retail and oil and gas services, has seen the emergence of certain behavioral traits.

Marlborough Managing Partner, Jonathan Guise, said: “For many years we have been asked how direct lending funds behave in stressed scenarios. This has been virtually impossible to answer given benign credit markets have resulted in an almost complete lack of stressed situations to test them. However, 2017 has seen a notable uptick in stressed situations involving direct lenders and a clearer picture is starting to emerge. The lessons learned so far will no doubt be extremely valuable when we inevitably enter the next cycle”.

Marlborough Partners – UK & DACH Mid-Market Quarterly Snapshot – Q3 2017

For further information, please contact:

Jonathan Guise +44 (0)203 053 3602 jg@marlpar.com

About Marlborough Partners

Marlborough Partners, based in London and Frankfurt, provides specialist, independent advice to private equity firms, portfolio companies and corporates, on sourcing and structuring debt and other non-equity finance.  Since 2003, the Marlborough team has advised on 218 completed transactions – from the simple to the highly complex – comprising over €55bn of primary market debt issuance, waivers and amendments and loan restructurings in eleven European jurisdictions. For further information, visit www.marlboroughpartners.com

Marlborough Partners’ Q2 2017 Report

The firm is pleased to announce the report covers both the UK and, for the first time, the DACH Leveraged Loan markets as a result of the ever growing Pan-European presence of Marlborough Partners.

 

The report, analysing data from a number of sources, shows European leveraged loan volumes were c. €58bn for H1’17 which was c. 1.9x higher compared to H1’16, reflecting the ever continuing theme of ‘too much money’ chasing ‘too little product’. The European high yield market also grew in tandem with its loan market counterpart, with volumes almost doubling compared to H1’16.

 

With market yields falling in the latter half of 2016 and continuing in the first half year of ‘17, activity in the European Leveraged Loan market has been dominated by opportunistic refinancings and repricings, as borrowers sought to take advance of lower pricing. The ongoing trend of tighter spreads is driven by strong underlying market conditions, imbalance in supply and demand and a lack of investor pushback.

 

The report also considered the looming implementation of ECB leveraged lending guidelines in November 2017. A number of important considerations are raised in the report such as the fact that a significant number of bank participants will not be covered by the guidelines and that the leverage cap of 6x gross leverage currently includes undrawn facilities including baskets, freebies, incrementals and accordions which would potentially mean capturing the vast majority of leveraged loans.

 

Marlborough Partner, David Parker, said: “4 years ago banks actively operating in the US leveraged finance market went through a protracted process of understanding and implementing the Fed guidelines. Given the ECB guidelines do differ in some respects to the Fed equivalent, we expect banks operating in the European leveraged finance market to also go through a length process of implementation. Having a view institution by institution of their approach to following these guidelines will be an important consideration for a prospective borrower”

Marlborough Partners – UK & DACH Mid-Market Quarterly Snapshot – Q2 2017

For further information, please contact:

David Parker +44 (0)203 053 3601 djp@marlpar.com

 

About Marlborough Partners

Marlborough Partners, based in London and Frankfurt, provides specialist, independent advice to private equity firms, portfolio companies and corporates, on sourcing and structuring debt and other non-equity finance.  Since 2003, the Marlborough team has advised on 204 completed transactions – from the simple to the highly complex – comprising over €54bn of primary market debt issuance, waivers and amendments and loan restructurings in eleven European jurisdictions. For further information, visit www.marlboroughpartners.com