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
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