Disintermediation in Europe: ABS uncertainties; French Fund Bonanza
“In the mood for loans" is a regular publication focusing on developments in the private debt market in Europe. The current state of this market raises questions about the dynamism of the European economy. The reports take a closer look at the recent finalisation of the framework for modernising financial markets in France. This framework ends banks’ lending monopoly and could therefore take the French and European private debt markets to a new level. Meanwhile, can the European ABS market improve after almost halting following the coming into force of EU securitisation regulation on 1 January 2019?
Looking at the sub-sectors of the private debt market, the whole of Europe is transforming as it strives to meet the COP21 climate objectives. The 2018 figures for the sustainable energy market highlight the high level of activity there. In the green economy, there are new offshore floating wind farms and solar power stations – supported by the emergence of PPAs – in the making. SMEs’ access to credit remains strong, although risk, as measured by bankruptcies, is increasing slightly. The series of SME failures in France is bottoming out after almost three years of continuous declines. Other traditional sub-sectors such as aircraft and CRE remain buoyant.
There is no doubt however that Europe's private market is still lagging that of the US. European banks however, have been generally supportive of non-financial companies, with fierce competition in lending keeping liquidity premia at low levels as a result. Yet in an environment of low rates, asset finance still offers higher returns and diversification.
SG Cross-Asset Research is composed of more than 200 analysts, strategists, economists and quants who combine their expertise into research-based and innovative solutions suited to client needs. These include fundamental studies and expert views, investment ideas and long-term strategies, trade ideas and tactical baskets, thematic and systematic indices, and quant solutions. In addition, its established UK and Western European bases, SG Cross-Asset Research benefits from global coverage thanks to its presence in the US and Asia (Hong Kong, Singapore, Tokyo and Bangalore) and its local networks in Eastern Europe.
This editorial contains financial analysis which reflects the opinion of the Cross-Asset Research department of Societe Generale at the date of its publication. It does not necessarily reflect the views of the other departments of Societe Generale nor the official opinion of Societe Generale. This interview is dedicated to institutional and professional investors and is not deemed to be seen and used by retail investors for investment purpose. The viewers shall consult their own financial advisers to make their own appraisal.