German debt space heats up as lenders jostle for big loans

Germany’s debt space is gathering pace as more and more lenders compete to underwrite big loans, according to Jörg Schürmann, managing director of corporate finance at JLL in Frankfurt.


‘More and more people are looking at debt and banks are becoming more aggressive with regard to LTVs in order to compete with alternative lenders,’ Schürmann said.

In a further sign that banks have had to significantly up their game this year, many lenders will now underwrite loans for as much as €150 mln – up from just €100 mln a year ago, Schürmann added. In addition, LTVS are creeping up again to around 70%, up from 60% a year ago, he said.

Subsequently, as a direct result of increased competition, margins are being eroded: ‘This year, margins have typically decreased by 10 to 15 basis points on a five-year loan,’ he added. Fierce competition for loans is now propelling Germany towards a lending surplus, projected to be around €1.58 bn by the end of 2014, according to KPMG.