2016 sets a new record

The US market for traditional private placements (TRDPPs) set a new annual record in 2016 with $49.4bn raised via 210 deals. Volume has stayed strong with $10.8bn via 44 deals into Q1 this year, the highest Q1 since 2012 ($11.6bn via 36 deals). Though TRDPP transactions are all US-marketed, interest from foreign companies has been increasing. Additionally, the currency composition of these deals has undergone a shift in recent years, with non US dollar–denominated debt becoming more popular among issuers.

UK and Australian issuers lead foreign volume

In 2016, almost half (47.8%) of TRDPP debt was foreign, up slightly from 45.9% in 2015. The UK and Australia lead foreign issuance in the market, accounting for 32.1% and 22.0%, respectively, of volume in 2016. Though UK market share dipped by 4 percentage points year-on-year in 2016, overall European issuers kept up the momentum. The region led with 59.1% of the foreign TRDPP market in 2016 and 46.3% in 2015, due to an increase in TRDPP volume from issuers in other countries, including Sweden, Germany, and Finland. This YTD, however, foreign transactions have yet to show a high level of activity, with only 28.4% of the global market.

US dollar-denominated debt loses shine

Traditionally the most likely currency choice, the US dollar has waned in popularity in the last couple of years. In 2017 YTD, only 38.9% of foreign TRDPP issuance was denominated in dollars, down from 49.5% last year and 91.6% in 2010. Accordingly, the British pound and euro have both grown in prominence, accounting for 39.6% and 13.9%, respectively, of the foreign market in 2017 YTD.

The foreign currency boost was facilitated by the willingness of US insurers, the main investors on this type of issuance, to offer synthetic currency through debt swaps. Also, the weakening of currencies such as the pound and the euro may have pushed investors to acquire debt in non-dollar currencies. Therefore, there is an expectation of other international players tapping the TRDPP market this year, and strengthening the participation of foreign currencies in this market.

Data source: Dealogic, as of April 18, 2017