An outlook on interest rates and geopolitical developments.

Private equity investment is nothing new for the domestic financial services sector. Yet already in 2018, $1.3 billion of M&A activity has exceeded the previous annual peak of 2013, led by Cerberus’ acquisition of HSH Nordbank. This follows a string of deals last year, including Apollo’s buyout of Oldenburgische Landesbank AG and HPS Investment Partners bid for parts of IKB. Meanwhile, the capital raising of NordLB from private investors and Deutsche Bank’s strategic repositioning show the commercial and regulatory realities of operating a bank in Germany today. In this panel we consider the outlook for the sector, the value creation angle for private equity owners and consider future opportunities.

This session will offer an outlook from borrowers and lenders on trends in the bond, loan and Schuldschein markets. German leveraged loan issuance has climbed strongly in recent years, buoyed by cheap financing costs and the freely callable nature of loans. Refinancing and repricing activity drove over 50% of loan issuance in early 2018, according to Debtwire data. German debt represents a significant share of European CLO holdings, at almost EUR8bn. By contrast, German high yield bond volume has trended down, impacted by factors including ‘rising star’ issuers moving into the investment grade space. Schuldschein has gained favour among non-German borrowers, which have grown from 20% of the market a few years ago to 50% today. This has given corporates access to a new investor base away from the capital markets through a simpler and cheaper structure.  However, recent restructuring cases may have an impact on investor appetite.

This session of investors and traders will consider how the different instruments discussed in the previous panel may behave in restructuring scenarios.

Behind-the-scenes presentation of recent developments in the restructuring case.

As the supply chain for automotive and parts manufacturers continues to shift, we consider the immediate impacts of connected vehicles and autonomous driving.

This session will consider the triggers for the turn of the cycle, inspired by discussions from the previous sessions and opening keynote. Panellists will also be asked how they think the restructuring landscape may be different, such as the risk appetite of German banks to buy into restructured companies as other creditors sell out. We also ask how investors may source opportunities following years of cov-lite loan issuance.