EC published report on a study on identifying market and regulatory obstacles to the development of private placement of debt in the EU. The study shows that private placement of debt instruments with institutional investors could play a greater role in financing medium-size companies in the future. The study also highlights a considerable growth potential for private placements in the EU due to new domestic markets and increased cross-border activities.
The paper comprises two parts: an economic part and a legal part. The economic part contains five sections involving stock-taking of existing and well-functioning private placement markets, cost-benefit analysis of private placements vs. other financing instruments, assessment of growth potential of private placement markets in Europe, risk analytics of private placements, and mapping of innovation in the private placement sector. The legal part contains three sections that cover analysis of regulatory best practice in well-functioning private placement markets, identification and analysis of regulatory obstacles to the development of private placement markets across the EU, and analysis of most common risk-mitigation clauses in private placement transactions.
In line with the Capital Markets Union Action Plan, the study identifies best practices in the well-functioning EU markets of private placements (mainly the German Schuldschein and the French EuroPP) as well as potential barriers to their development. The study shows that private placements allow investors to diversify their investment portfolio to unrated, private firms while earning an attractive return. Moreover, the risk profile of private placement instruments is not substantially different from senior unsecured debt. No major regulatory barriers preventing further growth of private placements in the EU have been identified as requiring immediate attention. However, some steps could be taken at the European and national levels to foster the development of private placement markets.
Related Link: Press Release
PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).
EIOPA published the financial stability report that provides detailed quantitative and qualitative assessment of the key risks identified for the insurance and occupational pensions sectors in the European Economic Area.
EBA published its risk dashboard for the first quarter of 2020 together with the results of the risk assessment questionnaire.
EBA announced that the next stress testing exercise is expected to be launched at the end of January 2021 and its results are to be published at the end of July 2021.
PRA published the consultation paper CP11/20 that sets out its expectations and guidance related to auditors’ work on the matching adjustment under Solvency II.
MAS published a statement guidance on dividend distribution by banks.
APRA updated its capital management guidance for banks, particularly easing restrictions around paying dividends as institutions continue to manage the disruption caused by COVID-19 pandemic.
FSB published a report that reviews the progress on data collection for macro-prudential analysis and the availability and use of macro-prudential tools in Germany.
EBA issued a statement reminding financial institutions that the transition period between EU and UK will expire on December 31, 2020; this will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis via passporting.
SRB published guidance on operational continuity in resolution and financial market infrastructure (FMI) contingency plans.