Banking lawyers and private equity managers have called for
European regulators to include loans as an eligible asset for
investment by Ucits (undertakings for collective investment in
transferable securities) funds. Market participants believe it
would inject much-needed liquidity into the market.
In the US, retail loan funds driven by the baby boomer
generation are a big source of liquidity for the loan market.
However in Europe Ucits regulations prohibit these funds
investing in loans.
According to Christopher Kandel of Latham & Watkins in
London, it would make a huge difference to European loan market
liquidity if the Ucits regulations were changed to allow for
retail loan funds.
"It would be a very important step for the European market. If
people are focused on how to get liquidity for companies,
it’s surprising that there is no momentum for
this," said Kandel.
Hugh Briggs, a managing director at CVC Capital Partners