BELGIUM Law and Practice Contributed by: Wim Aerts, Dorothée Vermeiren and Stijn Van Walleghem, Clifford Chance
Clifford Chance Avenue Louise 149 1050 Brussels Belgium
Tel: +32 5 533 59 11 Fax: +32 5 533 59 59 Web: www.cliffordchance.com/people_and_places/ offices/brussels.html
1. Private Credit Overview 1.1 Private Credit Market
loan market is limited. However, where a trans - action is indeed in scope of both, borrowers will often consider both options, and the competitive dynamics at that point in the Belgian market are not generally different from those in other Euro - pean markets. 1.3 Acquisition Finance The Belgian market has always been very well served by the strong Belgian banking sector, often through club deals in view of the mid- market nature of many Belgian transactions. Looking across market segments, it may be too early to consider private debt the preferred form of acquisition financing in Belgium, although the share of acquisitions financed through private debt is clearly growing. 1.4 Challenges In Belgium, private credit may be considered to be fairly expensive debt compared to typical club deals. In the past few years, sponsors have been opportunistic in having higher leverage and financing add-ons, with all debt or mostly debt, and benefit from other flexibilities offered by pri - vate debt documentation, as well as benefiting from a decrease in pricing difference with other products due to competitive dynamics.
The overall market for event-driven financings was generally considered slow in Belgium in the past 12 months, primarily reflecting reduced M&A activity in the upper segments of the mar - ket, with notable exceptions. This is in line with the picture observed in other jurisdictions and not as such due to specific local conditions. While Belgium has always been a market very well served by traditional banking lenders, in particular in the mid-market segment, the increased prevalence of direct lending over the past few years has been notable, including over the last 12 months, and against the background of reduced M&A activity. This may be due in part to the desire to reach higher leverage levels and also due to a decrease in pricing difference between traditional bank lending and private debt. 1.2 Interaction With Public Markets In view of the overall size of most transactions, the number of issuers of high-yield debt and/ or broadly syndicated loans is small, and the number of transactions that would be suitable to both the private debt market and the syndicated
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