François Lacoste, Partner at Idinvest, talks to Reuters about LPC-European direct lending
Discipline in the European private debt market is wavering as funds compete to offer the best terms and pricing for borrowers in an environment awash with liquidity. Few funds operating in Europe pre-date the global financial crisis and have only worked through a period of low default rates, so many are unable to demonstrate an investment track record during difficult economic times. Sponsors are taking advantage of the increased competition between funds, with many noting that leverage in middle market loans is reaching 2007 levels and risk is not priced appropriately. "Stretched senior is just a word to justify very low pricing," said François Lacoste, Partner at Idinvest.