This third edition of The Lending and Secured Finance Review comes at a particularly uncertain time for the financial markets.

Although the debt markets have been relatively resilient in the face of a series of shocks, the economic outlook remains uncertain: concerns about Brexit, the slow pace of growth in the eurozone, exchange rate movements and the competitive threat posed by deregulation in the US to the UK and European financial markets are among multiple geopolitical risk factors on the horizon.

While none of these factors appears as yet to be having a material or market-wide negative impact on loan documentation terms or availability, lending volumes did decline in 2016/2017 across the broader Europe, the Middle East and Africa (EMEA) region. This decline is generally attributed to a drop in refinancing activity (many borrowers having met their refinancing needs during 2014/2015), lessened demand for event-driven financings (the prospect of Brexit and the election of President Trump, among other factors, having had a chilling effect) and a decline in demand for corporate credit as central bank measures and a low interest rate environment continue to support a good flow of liquidity.

Indeed, the combination of a liquid market and limited demand has meant that many borrowers have been able to achieve favourable pricing and terms. This downward pressure on pricing and terms has been particularly evident in the leveraged market, where pricing has fallen significantly and the incidence of covenant-lite terms has increased materially. More recently, there have been some signs of banks adopting a more cautious approach to lending terms on a deal-by-deal basis, although this has not yet translated into a tightening across the market, and it remains to be seen whether the currently borrower-friendly conditions that are being achieved will continue through the remainder of 2017.

This edition of The Lending and Secured Finance Review contains contributions from leading practitioners in 23 different countries, and I would like to thank each of the contributors for taking the time to share their expertise on the developments in the corporate lending and secured finance markets in their respective jurisdictions and on the challenges and opportunities facing market participants. I would also like to thank our publishers without whom this Review would not have been possible.

I hope that the commentary that follows will serve as a useful source for practitioners and other readers.

Azadeh Nassiri

Slaughter and May


July 2017