2014

Bank Pullback in Europe Creates Direct Lending Opportunities for Institutional Investors, According to Alcentra New Regulations Forcing Structural Change in Industry

NEW YORK and LONDON, Feb. 19, 2013 /PRNewswire/ -- Institutional investors have a growing opportunity to provide loans directly to European mid-sized companies as European banks reduce their lending, according to Alcentra, the sub-investment grade investment specialist for BNY Mellon.

Alcentra's comments are published in its January white paper, European Banking Changes Create New Opportunities for Direct Lending, which notes that new regulations are driving European banks to cut back on lending to mid-sized companies.  The pullback by the banks has created the opportunity for new lenders.

"Becoming a lender to mid-sized companies can be particularly compelling to institutional investors," said Graeme Delaney-Smith, head of European direct lending and mezzanine investments for Alcentra and author of the report.  "We believe institutional investors are able to demand more attractive terms than in the broadly syndicated loan and high-yield bond market, although this is at the expense of liquidity."

In Europe, banks account for a substantially greater share of corporate financing than in the United States, the report said.  As banks continue to deleverage to meet the new regulations, credit will become less available to companies that need it, according to the report.

The report notes that European governments recognize the need to provide sufficient credit for middle market companies and have launched programs to encourage greater non-bank lending to fill the gap.  In the UK, Alcentra is one of four investment firms participating in the HM Treasury's recently launched Business Finance Partnership program to invest up to 1.2 billion pounds for loans to mid-sized businesses operating in the country.

While the report focuses on the opportunities available to institutional investors, it also cautions that these institutions should undertake highly detailed credit analysis of the borrower before investing.  Delaney-Smith said, "As this is a specialized market, we believe investors seeking to maximize returns and avoid default risk should work with experienced managers who can perform the credit analysis and leverage their expertise in this market."

Notes to Editors:

Alcentra is an asset management and investment group focused on sub-investment grade debt capital markets in Europe and the United States. The group has an investment track record that dates back to 1998 and spans across 48 separate investment strategies totaling approximately $15.1 billion. Alcentra is more than 97.2 percent owned by BNY Mellon and 2.8 percent owned by the employees. 'Alcentra' refers to both Alcentra Limited and Alcentra NY, LLC. Assets under management include assets managed by both companies.  More information can be found at www.alcentra.com.

BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.4 trillion in assets under management. It encompasses BNY Mellon's affiliated investment management firms, wealth management services and global distribution companies. More information can be found at www.bnymellon.com.

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 36 countries and more than 100 markets. As of December 31, 2012, BNY Mellon had $26.7 trillion in assets under custody and administration, and $1.4 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com, or follow us on Twitter @BNYMellon.

All information source BNY Mellon as of December 31, 2012. This press release is qualified for issuance in the UK and US and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized. This press release is issued by BNY Mellon Investment Management (US) and BNY Mellon Asset Management International Limited (ex-US) to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance.  The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements.  When you sell your investment you may get back less than you originally invested. Registered office of BNY Mellon Asset Management International Limited: BNY Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorized and regulated by the Financial Services Authority. A BNY Mellon Company.

 

 

SOURCE BNY Mellon



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