DENMARK Trends and Developments Contributed by: Morten Krogsgaard and Lennart Meyer Østenfjeld, Moalem Weitemeyer
ence in yield compared to traditional financing and the lighter bond covenant regime, which offers more flexibility compared to tradition- al lending. The use of debt capital markets is expected to continue growing, driven by the need for diversified funding sources and the desire to optimise capital structures. Recent months have seen announcements of debt capi- tal market transactions supporting this trend. The Nordic high-yield corporate bond market has occasionally been utilised as an acquisition finance tool. However, Denmark continues to be a small market in this regard. When used, issu- ances are typically under Norwegian or Swedish international securities identification numbers (ISINs) due to the more established and liquid markets in Norway and Sweden and the poten- tial better terms and conditions for issuers and investors alike that these established markets can offer. Overall, the debt capital markets in Denmark are evolving, with corporates and private equity players increasingly turning to bond markets to finance acquisitions. This trend is expected to continue as companies seek to diversify their funding sources and optimise their capital struc- tures amidst favourable market conditions. Club Deals and Syndicated Market Interest rate cuts in 2024 fostered more favour- able conditions for acquisition financing. For smaller transactions, bilateral deals remained open for business, providing flexible and acces- sible financing options. These arrangements allow companies to leverage their existing rela- tionships with banks, often on an uncommitted basis or very “documentation-light” basis, to secure the necessary capital without extensive formalities. This flexibility is particularly benefi- cial for smaller companies that may not have the
resources or need for more complex financing structures. For larger transactions, corporates turn to small club deals to secure substantial amounts of cap- ital. These deals involve a small group of “usual suspect” banks working together to provide the necessary funding. This approach allows for more personalised and tailored financing solu- tions as the banks involved can cater to the spe- cific needs and complexities of the transaction. Businesses often approach banks directly to negotiate these tailored solutions, ensuring that the financing structure aligns with their strategic goals and financial requirements. While the broader syndicated loan market seems to be recovering and regaining market share, this recovery has yet to significantly impact Danish transactions. Non-domestic sponsors looking at Danish assets consider the syndicated mar- ket attractive. These sponsors are drawn to the potential for substantial funding and the risk mitigation offered by syndicated loans. Despite this interest, transactions still need to material- ise, indicating a cautious approach by investors and lenders in the current economic climate. Private Debt Private debt continued to play a significant role in acquisition finance transactions and is expect- ed to remain important. In a market where agility is crucial for closing transactions, private debt has demonstrated its relevance by offering tailor- made, transaction-specific solutions and lever- aging borrower relationships in a way that sets it apart from more traditional lending sources such as: • tailor-made solutions: private debt provid- ers offer customised financing solutions that are specifically designed to meet the unique
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