Europe highlights

  • At the start of the year, one certainty was continued, uncertainty both political and economic, European-wide, and that has indeed proven to be the case. With a building consensus that market is near the top of the cycle, lenders are managing portfolios accordingly, with strong emphasis on the downside risks. This has resulted in a flight to quality with strong proven credits in performing sectors continuing to secure borrower friendly terms, whilst credits in challenged sectors are facing challenging market reception
  • Liquidity remains strong: €XXXbn of direct credit funds closed in Q1; which, while a proportion has already been successfully committed, a lot of dry power is yet to be deployed
  • Given underlying M&A was muted, the refinancing / recapitalisation activity was strong as sponsors future proof portfolios or, possibly with an eye on future fund raising, use debt to deliver returns to investors in lieu of a fill exit. In this scenario, portability clauses are a must for borrowers and sponsors and accepted by lenders who view it as an opportunity to extend average hold period.
  • Given YTD volumes, and extent of CLO warehousing / ramping of managing accounts, we expect to see some opportunistic refinancings and repricings, if current market conditions hold
  • The Capital Advisory teams continues to be very busy on the refinancing front, enabling borrowers to take advantage of benign market conditions and to lock in advantageous terms

LBO transactions per region

UK Highlights

  • Leveraged loan volumes rebound slightly in Q1 2019 with February and March to £XXbn vs £XXbn in the same period last year
  • However, deal pipeline continues to be impacted by prolonged Brexit uncertainty

Type of refinancing by structure (UK)

The UK sponsor backed mid-market was very busy in Q1 2019, with strong activity in both unitranche and club deal issuance

France Highlights

  • Despite low volumes in January, the French market remained active
  • Q1 2019 volumes have been primarily driven by M&A activity (Comexposium, Hana Group, Stella, Proxiserve, INSEEC) and to a lesser extent, refinancings and add-ons (DomusVi, Colisée, Ceva)

Number of deals per quarter (France)

Strong leveraged financing activity has continued in France, with issuance broadly flat at 24 deals in Q1 2019 (vs. 26 in Q4 2018) with LBOs accounting for over two-thirds of deal flow

DACH Highlights

  • The leveraged loan market slowed in January and February, however activity recovered slightly in March with a number of auctions coming to market
  • Financing terms continue to be competitive on both all-senior and unitranche debt as lenders chase limited supply. Alternative lenders maintain a sizeable market share

Issue volume per deal type (DACH region)

In Q1 2019, the DACH leveraged loan market slowed following a drop in M&A and lending activity, however alternative lenders maintained a sizeable market share

Spain Highlights

  • Spanish leveraged loan volumes recovered in Q1 2019 (13 deals vs 6 in Q4 2018), primarily driven by an increase in M&A activity in the market
  • Mid-market transactions continue to be dominated by local lenders (e.g. Frias Nutricion, Litalsa) despite increased presence of direct lenders

Number of deals per quarter (Spain)

Following a trough in activity in 4Q18 with 5 deals tracked in the quarter, Spain has seen a pickup in leveraged loan activity in 1Q19, with 13 deals

DC Contacts

Justin Holland
Managing Director

T: +44 20 7856 0944

Ciara O’Neill
Managing Director

T: +44 20 7856 0925

Jonathan Trower
Managing Director

T: +44 20 7856 0912

Nicolas Cofflard
Executive Director

T: +33 (0)1 4212 4964

Daniel Gebler
Managing Director

T: +49 (0)69 9720 0429