For many years, many mid-sized European companies have accessed the US Private Placement (USPP) market, making up a significant proportion of its nearly $60 billion of annual issuance. The popularity of private placements has accelerated since the onset of the financial crisis, with markets in countries such as France and Germany providing borrowers with a local solution. However, until now, there has been no pan-European private placement market. The demand for private placements is set to increase as the EU’s approximately 200,000 mid-sized companies look to diversify their sources of funding away from the traditional bank loan market, and view private placements both as an alternative and as an intermediate step towards the listed bond markets.

The Guide builds on existing practices and documents used in the European bond and loan markets, especially the Charter for Euro Private Placements developed by the Euro PP Working Group, a French financial industry initiative. It is expected that the Guide will:

1. Expand cost-effective funding opportunities for European mid-sized companies,

2. Grow the European investor base for private placement transactions, and

3. Lower operation costs by promoting the use of standardised PEPP transaction documentation (recently released by the Loan Market Association and the Euro PP Working Group).

The objective is that most European private placement transactions will eventually use the Guide as the market standard. Going forward the PEPP Working Group will be further looking amongst others to promote investor-side incentives for PEPP financing and to lift remaining obstacles to its development.

The release of the Guide has been welcomed by the official sector in Europe with the following comments: