IGTA Journal - Summer 2018

France, Article: US PP, Schuldschein, and Euro PP By Arnaut Brunet, Chief Editor, from La Lettre du trésorier, the monthly magazine of AFTE, the French IGTA Member Association, Nr. 356, April 2018 US PP (US Private Placement) . This is the private placement generally used in the United States under the umbrella of the National Association of Insurance Commissioners (NAIC), which, among other things, issues compulsory credit ratings. A dozen institutional investors, most life insurance companies including Prudential, Met Life, New York Life, North Western Mutual or Pacific Life, capture a very large part of the investments. . Issuers, generally well rated (80% are NAIC 1 or 2, which corresponds to the investment grade category), are half foreign. British, Australian and European Union companies each account for one-tenth of the amounts raised. Beyond NAIC 2, spreads of credit take the elevator. . Contracts, voluminous, may, depending on the case, contain many covenants. . Some 30% of the funds lent are in a currency other than the US dollar (sterling, Australian dollar, euro, etc.). . Large syndications. . Trend in recent years, the lengthening of maturities: tranches to fifteen years or more are now common (with, in recent years, the possibility of postponed departure and prepayment). . Average ticket: approximately 300 million dollars. . French companies: Air Liquide, Auchan, Bellon, Bonduelle, Bureau Veritas, Compagnie des Alpes, Essilor, Neopost, Safran... Schuldschein (German Debt Certificate) . Very old German market, mainly banking one, which initially financed local Authorities. . Short and standardized contracts, governed by German law. . Most often, very large pools of investors, mostly German, European, Indian, Taiwanese banks, etc. . Market appreciated for its confidentiality. . Issuers, 80% of which do not have a public rating, are more and more non-German: around 40% in 2017, including some from Central Europe (O2 Czech Republic, MOL Hungarian Oil and Gas ...), Middle East (Etihad Airways ...) and Asia (Sumitomo ...). . Issuers are generally treated as investment grade, but the average credit quality decreases with internationalization and the increased presence of SMEs and midcaps (around 40% in 2017). . Share of funds in currencies other than the euro: around 20%. . Median spread in 2017: Euribor + 110 basis points, according to Scope Ratings, but dispersion is important. IGTA eJournal | Summer 2018 | 10