Insights

France is an increasingly attractive market for private debt investors thanks to a powerful mixture of structural and temporary factors.

One of a series of papers where our in country leaders examine key themes and trends important to investors and corporates in Europe.

The European macro outlook continues to be supportive for private debt.

Q1 2019 saw a broad rally across asset classes to levels last seen before the sell-off in Q4 2019.

We believe that most of the Direct Lending capital in the market over the last 12 months has been directed towards the Upper MidMarket (deals with an Enterprise Value above €500 million), where investment opportunities are readily accessible through investment banks and sponsors.

Q3 saw the ~75bp summer widening in syndicated loan markets completely reverse in the face of dwindling supply, negligible pipeline and record CLO issuance. However, recent market weakness has seen syndicated loan yields start to widen once again.

Private debt, we believe, is more attractive than other private and public asset classes on a relative value basis.

We are seeing increased competition in the upper end of private debt markets (€200m+)

Despite concerns of rising populism in Europe and further afield, strong corporate earnings and a low default environment continue to be supportive for direct lending in Europe.

The positive market tone seen at the end of 2017 has continued during the first quarter of 2018 with the Eurozone GDP forecast at 0.6%1 for Q1, the same pace of growth as Q4 in 2017.

Dry powder – the amount of money raised by fund managers that has yet to be deployed – is an in-vogue topic.

Dry powder – the amount of money raised by fund managers that has yet to be deployed – is an in-vogue topic.