Bloomberg – At a time when interest rates and defaults are rising, Europe’s lowest-rated companies are having no trouble getting loans.
More than 100 European borrowers that can’t get investment- grade credit ratings, from Yellow Pages publisher Yell Group Plc to Paris-based buyout firm Wendel Investissement SA, have raised a record $110 billion in 2006, just above last year’s total and almost double the amount in 2004.
Companies have saved at least $275 million in interest costs this year because new lenders are piling into Europe, according to data compiled by Standard & Poor’s and Bloomberg. Hedge funds and money managers, including Silver Point Finance LLC and Black Diamond Capital Management LLC, are providing most of the money because loans offer them more protection from defaults and the ability to profit from rising interest rates.
“The debt markets have become cheaper to access,” said John Davis, Yell’s chief financial officer, in an interview from his office in Reading, England. “There are more providers of debt, and that has made the cost of financing more attractive.”
