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 in...
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