Mixed picture for loans across Europe

In times of uncertainty, Europe-marketed loan volume fell in 2017 YTD to €103.3bn, the lowest since 2014 (€94.4bn). With Dutch and French elections around the corner, loan volumes in those countries have fallen from last year by 41% and 64%, respectively, as borrowers hold off taking on more debt until the political landscape becomes less volatile. However, not all European countries saw a decline in volume, and certain economies are now entering more stable periods that allow for recovery opportunities.

Loan volumes held hostage by political uncertainty

In addition to an overall decline, loan volume in 2017 YTD has shifted in terms of dominant countries. So far this year, the top nationalities for Europe-marketed loans are the UK (42.2%), the US (8.4%), Switzerland (6.8%), Spain (6.1%), the Netherlands (5.1%), and Germany (5.1%). The UK dominated due to British American Tobacco, whose €30.0bn loan facilities were signed in January. Meanwhile, the higher US share was helped by a wave of cross-border repricings that accounted for 45.5% of US deal activity marketed in Europe so far this year. This is a significant change from the past decade, when the share of US loans ranked seventh at its highest.

Spain knocks France out of top six

In contrast to much of Europe, Spanish loan volumes increased to €6.3bn this YTD from €5.1bn in the same period last year. Average deal size in Spain is the smallest among dominant nationalities at €350m, but activity level stood at 18 deals, the second highest among the top 10 nationalities. With Spain experiencing a recovery, its share of Europe-marketed loan volume in 2017 YTD has increased to 6.1% from last year (3.3%) — enough to knock France out of the top six borrowers by nationality. This highlights Spain’s potential to play a bigger role in the European loan market in comparison to its neighbors, who face complex political challenges this year.

Data source: Dealogic, as of March 14, 2017