Private placements: Ex uno, plures

NEOPOST, a French firm that specialises in mail-handling services, is nothing if not ecumenical when it comes to raising money. In January 2012 two-thirds of its debt consisted of conventional bank credit; by January 2013 less than one-tenth did. In the meantime the company raised $175m through a private placement of notes in America, €150m ($204m) through a bond placement and €150m in non-bank loans in France. It also collected €67m and $95m via certificates of indebtedness in the German Schuldschein market.As tougher prudential rules inhibit bank lending many European firms have turned to private placements (PPs): debt products structured as securities or loans and placed with a restricted group of professional investors by firms that need not be publicly quoted or rated. In 2012, a bumper year, European companies raised over €16 billion in private placements in America, €12.5 billion in Schuldscheine and €3.2 billion in France’s new “Euro PP” market, on estimates compiled by Standard & Poor’s, a ratings agency. Volumes overall fell in 2013 as other forms of finance flourished. But interest remains keen.Firms like private placements because they tend to be longer-dated than bank loans and quicker to issue than publicly traded bonds, though they usually carry a slightly higher coupon than either,…

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