The European private placement market could provide over €25 billion ($34.4 billion) of viable funding for companies, according to estimates in a new report by Bishopsfield Capital Partners.
However, at the moment, European borrowers seeking privately placed debt still have little option but to tap the U.S. market.
According to the report, U.S. private placement issuance averaged $42 billion annually in the years before the credit crisis. Additionally, $22 billion of bonds were issued in the first half of this year, almost exceeding total issuance in 2009.
Non-U.S. borrowers typically account for between 45% to 55% of issuance.
“European borrowers turning to the US private placement market provides clear evidence of the need for an equivalent market in Europe,” said Steve Curry, partner of Bishopsfield and author of the report called Borrower Push and Investor Pull: Will the European Private Placement Market Take Off?
Curry added that with the considerable refinancing from banks, there is a real need for non-traditional sources of longer-term debt.
"A European private placement market that has real depth would provide much needed extra funding capacity, as well as an attractive new asset class for yield hungry investors,” he said.