Real Estate Capital Europe’s Post

Dive into the latest insights on the European Union's Capital Requirements Directive 6 (CRD6) and its implications for US fund finance lenders. Authored by Kiel Bowen, Matthew Bisanz, Neil Hamilton, and Andy Hogan, this article explores the significant regulatory changes ahead and how CRD6 will impact US lenders providing fund finance credit facilities to EU borrowers. Stay ahead of the curve by learning how to navigate these upcoming requirements, expected to take effect by the end of 2026. Published by Mayer Brown, this is a must-read for fund finance professionals. https://lnkd.in/ebRFGuhM

Outlook: a supportive environment for private credit in 1H25 overall and manageable default rates, coupled with concerns over a more crowded field, new players and tightening spreads. #PrivateCredit #PrivateDebt #PrivateLending #M&A #AlternativeInvestments

The European Union’s new Capital Requirements Directive 6 (CRD6), expected to take effect by the end of 2026, introduces significant regulatory changes for non-EU banks operating within the European Union. This Legal Update explores the impact of CRD6 on US lenders providing fund finance credit facilities to EU borrowers, notably in Luxembourg and Ireland. #FundFinance #PrivateEquity #MayerBrown

The European Union’s new Capital Requirements Directive 6, expected to take effect by the end of 2026, introduces significant regulatory changes for non-EU banks operating within the European Union. This Legal Update explores the impact of CRD6 on US lenders providing fund finance credit facilities to EU borrowers, notably in Luxembourg and Ireland.   Read it here: https://lnkd.in/g29j5btT #FundFinance #PrivateEquity #MayerBrown

In the evolving landscape of commercial real estate (CRE) financing, a significant yet often overlooked risk emerges from the indirect exposure of banks to CRE through Real Estate Investment Trusts (REITs). Recent studies highlight that this exposure is substantially higher than previously reported, raising critical concerns about the stability and regulatory oversight of the financial system. #CommercialRealEstate #CRE #RealEstateInvestment #REITs #BankExposure #FinancialRisks #InvestmentStrategy #RealEstateMarket #PropertyInvestment #RealEstateFinance #InvestmentRisks #RealEstateNews #ChicagoRealEstate #CRETrends #CommercialProperty #RealEstateBlog #InvestmentTips #BankingSector #MarketAnalysis #REOProperties https://lnkd.in/ggJqNPP3

The European Union’s new Capital Requirements Directive 6 (CRD6), expected to take effect by the end of 2026, introduces significant regulatory changes for non-EU banks operating within the European Union. This Legal Update explores the impact of CRD6 on US lenders providing fund finance credit facilities to EU borrowers, notably in Luxembourg and Ireland. Read here: https://lnkd.in/gP-PnadA #FundFinance #PrivateEquity #MayerBrown

Interesting IFR opinion piece from Rupak Ghose today about the increased pace of partnerships between banks and private credit managers in direct lending and asset-backed markets. ‘Far from being a stand-off, the two sides should see their relationships as mutually supporting, in which banks originate assets and parcel up the riskiest slices for private credit funds – reducing their balance sheet exposure in the process and retaining profitable ancillary business – while private credit shops, with their advantages in not having to mark to market, count all that lovely interest income.’ The need to secure access to these new asset classes explains why private credit players are changing tack, looking to partner with banks rather than be their adversaries - and he kindly gives our recent report a shout. "What we are seeing is the re-tranching of the banking system where banks parcel the riskiest slice to private credit, providing less risky lending themselves. Private credit could be the Ozempic to help banks on yet another diet." i argued in our recent note. Rupak's interesting piece supports this thesis further #investing #economy #privatecredit #banking Oliver Wyman

Joe K. Wood discusses the recent Financial Times article regarding lenders flying blind on private equity risk. The Bank of England's cautious stance on LBO transactions is well-founded, especially given the current macro environment. Downturns often lead to higher insolvency rates, and the recent increase in the base rate by 500 basis points over the past two and a half years—from 25 basis points (16th Dec 2021) to 525 basis points (3 August 2023)—adds to the risk. However, amidst these challenges, there are strategic opportunities for sponsors to optimise their portfolios. Here's how: 1. Interest Optimisation: Sponsors should critically assess their portfolio company's interest payments. Are they overpaying? Sponsors can strategically reduce leverage and optimise their capital stack by refinancing existing debt or exploring alternative financing structures. 2. Collateral Utilisation: Asset-based lending (ABL) transactions allow sponsors to leverage collateral effectively. Companies can secure additional financing without diluting equity using assets such as accounts receivable, inventory, or PP&E. ABL-funded transactions provide flexibility and liquidity, especially through restructuring. 3. Dividend Recapitalisation: Profitable businesses in segments where enterprise value multiples remain depressed could benefit from dividend recapitalisation. Sponsors can deliver quick returns to investors by issuing debt to fund dividends. As with any portfolio review, they need to be assessed on a case-by-case basis. ACP Cadence Advisory LLP's vast knowledge and experience in ABL can support any portfolio review including the onboarding of companies/new transactions and exploring the art of the possible.  As a trusted advisor, we represent the client (and only work for the client) and always endeavour to provide the best solution without exposure to unnecessary risk. https://lnkd.in/gXF2TXm3 #debtadvisory #privateequity #ABL #risk

The Bank of England's cautious stance on LBO transactions is well-founded, especially given the current macro environment. Downturns often lead to higher insolvency rates, and the recent increase in the base rate by 500 basis points over the past two and a half years—from 25 basis points (16th Dec 2021) to 525 basis points (3 August 2023)—adds to the risk. However, amidst these challenges, there are strategic opportunities for sponsors to optimise their portfolios: 1. Interest Optimisation: Sponsors should critically assess their portfolio company's interest payments. Are they overpaying? Sponsors can strategically reduce leverage and optimise their capital stack by refinancing existing debt or exploring alternative financing structures. 2. Collateral Utilisation: Asset-based lending (ABL) transactions allow sponsors to leverage collateral effectively. Companies can secure additional financing without diluting equity using assets such as accounts receivable, inventory, or PP&E. ABL-funded transactions provide flexibility and liquidity, especially through restructuring. 3. Dividend Recapitalisation: Profitable businesses in segments where enterprise value multiples remain depressed could benefit from dividend recapitalisation. Sponsors can deliver quick returns to investors by issuing debt to fund dividends. As with any portfolio review, they need to be assessed on a case-by-case basis. ACP Cadence Advisory LLP's vast knowledge and experience in ABL can support any portfolio review including the onboarding of companies/new transactions and exploring the art of the possible.  As a trusted advisor, we represent the client (and only work for the client) and always endeavour to provide the best solution without exposure to unnecessary risk.. https://lnkd.in/ecgBfAbH #debtadvisory #privateequity #ABL #risk

Banks and insurers are making more requests to U.S. credit agencies for ratings on their risky loans to private equity funds that are secured against the value of their portfolio investments and cash flows that come from them. So far, the response from the agencies including the top 3 - S&P Global, Moody's and Fitch Ratings - has been cautious because the valuation of the assets backing the loans are difficult to assess as they are owned by an opaque investor base. https://lnkd.in/ePDiz9qf