FRANCE Law and Practice Contributed by: Arnaud Fromion, Frédéric Guilloux and Pierre-Benoît Pabot du Châtelard, Clifford Chance
1. Private Credit Overview 1.1 Private Credit Market
to reach the desired amounts within the capital structure and compete with the BSLs, ensure liquidity for future adds-on and/or relationship purposes. On midmarket transactions it is also a trend that has now been confirmed as certain sponsors are eager to not rely on a single private credit provider for a given transaction. 1.3 Acquisition Finance Private debt funds are becoming increasingly involved in bid processes, offering very competi - tive pricing in comparison to the syndicated loan market, with competitive underwriting fees and margins, and no flex, plus greater flexibility on leverage and covenants. Some banks are developing their own private debt vehicles. There has also been an increase in the number of NAV financings, including to the benefit of pri - The increase of Euribor has made it more diffi - cult for private credit to market their overall price (sometimes reaching 10%, which may be dif - ficult for French CFOs to hear). The ongoing political situation, with no estab - lished government in France, has also cre - ated substantial uncertainties for private credit players. The budget, including a potentially increased tax burden, has just been adopted. Consequently, many processes have come to a halt, although the authors are hopeful that activi - ties will pick up again by the second half of 2025. The reduction of inflation in France and decrease of the interest rates by the ECB will also help the market by enabling PE players to reach an agreement more easily on the valuation of their vate debt vehicles. 1.4 Challenges
The French market has significantly slowed down since last summer due to the dissolution of the French parliament and the ensuing politi - cal crisis. This ongoing situation, with no estab - lished government in France, has created sub - stantial uncertainties for private credit players. The budget, including a potentially increased tax burden, has just been adopted. Consequently, many processes have come to a halt, although the authors are hopeful that activities will pick up again by the second half of 2025. All industries and sectors have experienced credit activity. The key driver for borrowers in France to choose private credit results in their ability to raise additional debt to finance their build-up transactions and capex. 1.2 Interaction With Public Markets In the last six-to-twelve months, the public debt markets in France, including broadly syndicated loans and high-yield securities, have been com - petitive with the private credit market. Both lev - erage loan and high-yield issuance have almost doubled compared to the previous year, after a year of dominance of the private credit provid - ers. As a result of such reopening of the broadly syn - dicated loan markets and of lower interest rates, a strong refinancing activity in respect of private debt transactions has been noted. On the other hand, the authors have also seen some private credit providers refinancing Tranche A and/or Tranche B facilities with dedicated Tranche C facilities. The large cap private credit transactions are reg - ularly pooled between private credit providers
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