Shifting sands: An analysis of the German retail sector debt market

03 November 2016

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We are pleased to present Shifting sands: An analysis of the German retail sector debt market, published in association with Alteri Investors.
 
Based on interviews with 100 German retailers, the results paint a clear picture of a sector going through a transformational period, both in the way businesses retail and the shape of their debt financing.
 
Key findings include:
 
  • Over a third of German retailers expect up to 30% of future borrowing to come from credit funds, suggesting they are set to become a mainstream source of funding for the sector.
  • Traditional term loan debt from banks remains the main source of capital for the German retail sector, but availability of finance has tightened significantly in recent years.
  • Demand for flexible and stretch funding is at its highest as retailers navigate the route to omnichannel while dealing with the legacy of too many stores.
  • 11% of respondents’ existing debt comprises ABL and lending from direct lending credit funds (mean).
  • Retail assets and IP licensing are significantly underleveraged, opening the door to future asset-based lending.
  • Maturity profiles and headroom indicators further support the future growth of alternative debt financing in retail.