Some core markets will see a surplus of lending capacity in 2013-14 after Europe’s debt funding gap shrank by over 40% in the first few months of 2013, according to DTZ.
Some core markets will see a surplus of lending capacity in 2013-14 after Europe’s debt funding gap shrank by over 40% in the first few months of 2013, according to DTZ.
The broker's latest report indicates that Europe’s net debt funding gap for 2013-14 has come down by 42% from $86 bn to $50 bn (€61 bn and €38 bn) in recent months.
DTZ attributes the drop to continued bank deleveraging and strong non-bank lending to the commercial property market.
In some core markets like the UK, France, Germany and Sweden, DTZ now foresees a surplus of lending capacity for 2013-14. 'This is a remarkable reversal from the significant gaps noted in previous analyses,' the adviser said.
As a result of this emerging surplus, DTZ expects loan pricing in core European markets will change in the medium term. Also, non-banks might rotate more into non-core markets to safeguard margins.
DTZ said it expected some delays in debt fund capital raisings by non-bank lenders. However, this will be 'more than offset' by continued growth in corporate bond issuance and insurance lending year-to-date.
Nigel Almond, head of strategy research at DTZ and co-author of the report, said limited new lending capacity in Spain is expected to leave a $17 bn net funding gap. 'We also see smaller net gaps in Ireland, Italy and the Netherlands. This leaves a net funding gap of $50 bn across Europe as a whole.'
