US vs UK contracts

Author: | Published: 1 Dec 2007

The credit turmoil related to US subprime mortgages has produced a liquidity crunch on both sides of the Atlantic. The effect of this on the US-leveraged finance markets has been more marked than on the European market. There are a number of reasons for this. Firstly, the US pipeline for leveraged loans is much larger than the European pipeline. It is estimated that lead banks hold more than $300 billion in unplaced US lending commitments compared with less than a third of this in Europe. The US market has more exposure to single credits. This is because of a growth in deal size. Chrysler, First Data, Alltel, Clear Channel and TXU are leading examples. European credits have also grown, but not to the same extent. Excluding the €16.4 billion Boots transaction, which is thought to represent around 10% of European buy-out deal volume for the first half of 2007, the...