Private debt curing Brexit effect on UK loan market

Author: Olly Jackson | Published: 2 Mar 2018

The UK leveraged lending market is receiving a big boost from debt funds providing competition that is also driving improvements in banks. But this progress could be derailed by Brexit if a passporting arrangement is not made.

The growing number of debt funds coming to market is providing borrowers with an attractive alternative to banks, given that they tend to be more flexible and provide more favourable terms. Private debt fundraising reached $100 billion for the first time ever last year and average fund size grew to $1 billion, more than double the average size for the previous year ($478 million). Ares’ $3.4 billion direct lending fund and KKR’s $2.4 billion global credit fund are just two of the mammoth funds to close in the last 10 months.

Because private equity firms are focused almost entirely on returns, they are more willing to provide favourable terms to lenders....