A new era for mid-market funding?

Mid-market firms in Europe are struggling to meet their financial needs as traditional banks continue to undergo a deleveraging process. Alexandra Krief and Taron Wade, directors at Standard & Poor’s Ratings Services, explain how investors could fill the private funding gap

Mid-market firms in Europe are struggling to meet their financial needs as traditional banks continue to undergo a deleveraging process. Alexandra Krief and Taron Wade, directors at Standard & Poor's Ratings Services, explain how investors could fill the private funding gap

The funding environment for mid-market companies is rapidly changing. Europe’s mid-size businesses – defined as companies with revenues between €100m and €1.5bn – will require between €2.4trn and €2.8trn in debt market funding over the next five years. Yet regulatory constraints are forcing banks to shrink their balance sheets and cut lending to this sector. There is also a drive by mid-market companies, in the aftermath of the credit crunch, to reduce their dependence on banks by diversifying their sources of funding. Last year, net loan issuance to corporates in the eurozone was neg...