One of the most significant themes in European leveraged loans in 2014 was the continued convergence of terms with those seen in the U.S. There are a number of factors behind this convergence, including:
The main areas of convergence to date have included:
It has been interesting in the early part of 2015 to see that, whilst convergence was initially driven by (amongst other factors, as highlighted above) European issuers chasing better pricing and greater liquidity in the U.S. debt markets, the tables appear to be turning. A stronger dollar and lower European borrowing costs are attracting U.S. companies to issue debt in Europe. According to Dealogic, to date in 2015, U.S. companies and financial institutions have issued three times as much euro-denominated paper than in the same period last year. These so-called “Reverse Yankee” transactions are likely to lead to even greater alignment of terms between the Europe and the U.S.