Euro PP

Euro PP is “a medium or long-term financing transaction between a listed or unlisted company and a limited number of institutional investors, based on ad hoc documentation negotiated between the borrower (the Borrower) and the Investors (Investors), usually with the presence of an arranger (the Arranger) ” 1 .

Euro PP is a financing method recently arrived in France. He is from the “Schuldscheindarlehen” appeared in the xix th century in Germany and is a loan placed with qualified investors through a private placement.

Euro PP German

Definition of Schuldschein

The German semi-bond loan 2 , in practice, is referred to as “Schuldschein” (literally “debt recognition”) or “Schuldscheindarlehen” (literally “loan with acknowledgment of debt”) or “private investment loan” (literally “loan”). with private placement “) is a special type of loan to private law firms and legal entities of public law, appeared in the middle of the xix th century Germany. He is described as a hybrid loan lying halfway between the syndicated loan and the bond 3 . Since it was transposed into French law, it corresponds to “Euro Placements Privés” financing, also known as “Euro PP” 4.

According to the definition given by Antoine R. Cuny de la Verryère “The semi-bond loan is a loan of money generally granted at a fixed rate for a period of between 5 and 7 years, by several lenders (credit institutions, insurers, investment funds) for the benefit of a borrower who can raise large amounts of funds (often tens of millions of euros), through a private placement, this in general without any security, nor asked for no external rating, the risk of insolvency being mainly governed by covenants ” 5 .

Main advantages

From the point of view of investors 5 , in particular:

  • the eligibility of semi-bond loans for refinancing with the ECB ;
  • their decorated financial valuation of the capital market;
  • a relatively liquid secondary market generally driven by a market maker;
  • the possibility of accessing the SME market ;
  • eligibility for German insurers.

From the perspective of the borrower, including:

  • the low cost to mount the operation;
  • simple and standardized legal documentation;
  • the possibility of renegotiating the terms of the loan bilaterally;
  • reduced disclosure requirements that preserve anonymity;
  • the possibility of raising funds from the circle of institutional investors extended to (German) insurers and investment funds.

Legal regime

The German semi-bond loan is, in practice, still subject to German law, because of the more flexible conditions provided for by the German regulations, in particular as regards the transfer of receivables and the investment conditions of the insurers. It is an innominate loan agreement and its scheme is framed mainly by the loan of money fixed by the German Civil Code (§ 488 Abs.1 BGB). Its unnamed character comes from the fact that the Schuldscheindarlehenis the fruit of doing business in Germany. Therefore, the characteristics of this financing instrument have constantly evolved and adapted to the fiscal and economic environment of the German market (eg today,

Schuldschein credit transaction is a financing operation that can be complex. In addition to lending money, it involves other legal acts: the lightened debt assignment, the recognition of debt (optional), hedging contracts including credit risk (optional).

It should be noted that there are structured products involving German semi-bond credit, either upstream, when semi-bond receivables are securitized for the purpose of credit risk transfer (eg CLN, CLO) or, downstream, when the Schuldschein loan is used by a securitization vehicle to securitize other receivables (rare in practice) 6 .


Under French law, and compared to syndication of credit and bond, the Schuldscheindarlehen was qualified by the French doctrine of “quasi-bond loan”, due to the absence of union, the strong standardization the assignment of receivables (“quasi-fungibility”) combined with lighter debt assignment rules in German law (“quasi-negotiability”) 7 .

Thus, contrary to a widespread conception, debt recognition securities ( Schuldschein ) are not indispensable to validate a German semi-bond loan transaction, since the “quasi-bond” nature of the transaction derives essentially from the act of assignment of receivables that is standardized and lightened. The title Schuldschein constitutes, under German law, only a beginning of proof of the cession. It is not a financial security, it does not incorporate any law and is therefore became, in practice, of little use today 8 .

Internationalization of Schuldschein from the 2000s

In Germany, the Schuldscheindarlehen has long been the primary means for the German Federal State to raise funds before resorting to the bond mechanism. Nevertheless, it remains today the main financing instrument for the Länder and the German municipalities. As regards commercial companies, according to a study conducted by the regional bank Helaba, for the year 2011, while between 30-40 German companies resorted to the bond market, 70 have financed themselves on the Schuldschein credit market. Whereas it was initially only granted to large companies (listed companies), since 2005, it has gradually opened up to SMEs.

In France, several transactions were concluded from the 2000s. For example, in 2008, the groups SEB and RCI Banque respectively signed a Schuldschein of EUR 161 million and EUR 143 million . More recently, the Heleba bank announced that it had arranged a ten-year loan of € 10 million for the Strasbourg Regional University Hospital Center 9 .

Euro PP French

Transposition of Schuldschein in France in 2015

Two years after the law thesis defended in December 2012 at the University Paris-Ouest La Défense (congratulations of the jury), and following a publication highlighting the benefits of Schuldschein for the financing of SMEs, the Parisian market mobilized to offer a “French PP Euro” 10. The Euro PP Steering Committee, composed of the main professional associations of the Paris market and Euro PP market stakeholders, presented on January 8, 2015 two standard private placement contracts meeting both the needs French and international investors and issuers of all sizes in the growing Euro PP market. By making these standard contracts available to stakeholders, the aim is to foster the development of new financing instruments through the emergence of a more efficient and better integrated European private investment market via standardization of documentation. contractual. These standard contracts cover the entire Euro PP market, whether for loans or bond issues,11 .

Development of the Euro PP and Mini PP French market

As Euro PPs are not frequently quoted, the market is relatively opaque. In order to remedy this, the CMS Bureau Francis Lefebvre law firm has created an “Observatory of Euro PP” which presents the listed Euro PPs (part 1) and unlisted Euro PPs which have been the subject of a public announcement (part 2) 12 . The May 2015 report counted around 100 issues since 2012: around 80 Euro PP rated for 20 Euro PP not rated (declared) 13 .

In October 2016, the French company Origin Investing launched a simplified format of the Euro PP for SME-ETI type companies, under the brand name “Mini PP”. The issue of the Mini PP would be exclusively by a digital platform regulated by the AMF-ACPR 14 .

Notes and references

  1. ↑ Bank of France et al, ETI Financing. – Charter on “Private Placements Euro” or “Euro PP”, June 2014, p.  3
  2. ↑ FBF Green Paper of the European Commission on the long-term financing of the European economy, 2013, p.  31 ; see also A. Cuny de la Verryère, The semi-bond credit: a financing instrument of German origin adapted to French SMEs, Bulletin Joly Bourse, March 2013, p.  152-154 ; A. Cuny de la Verryère, The Schuldschein financing: Analysis of a German alternative financing booming, Larcier, 2014
  3. ↑ S. Vermeille, F. Burnat, French law unfavorable to the development of private placement, in Revue Banque, 27/11/2012
  4. ↑ VA Lam Nguyen, K. Papelard, Can the market for Euro Private Placements win? (dissertation), Paris Dauphine University, September 2014
  5. ↑ a and b A. R. Cooney of Verryère, ibid., P.  152
  6. ↑ AR Cuny de la Verryère, Credit operation Schuldscheindarlehen – legal qualification of a German financing instrument, th. Paris X (University Paris-Ouest-Nanterre-La Défense), 2012
  7. ↑ AR Cuny of Verryère, ibid., P.  153
  8. ↑ AR Cuny of Verryère, ibid., P.  153 ; see also AR Cuny de la Verryère, Credit operation Schuldscheindarlehen – legal qualification of a German financing instrument, th. Paris X (University Paris-Ouest-Nanterre-La Défense), 2012
  9. ↑  [ archive ]
  10. ↑ A. Cuny of Verryère, Semi-bond credit: a German original financing instrument adapted to French SMEs, Bulletin Joly Bourse, March 2013, p.  152-154
  11. ↑ . Bank and France et al, The Steering Committee Euro PP has two model contracts Euro PP (Private Placement Euro) meet the joint needs of issuers and investors, Press Release, 01.08.2015, http: //  [ archive ]
  12. ↑ ” Observatory Euro PP CMS Office Francis Lefebvre ”  [ archive ], (accessed June 9, 2017 )
  13. ↑ ” Observatory PP_mai Euro 2015 ”  [ archive ] , (accessedJune 9, 2017 )
  14. ↑ ” Origin Investing offers MiniPPs to finance large SMEs “, Agefi Assets, ( read online  [ archive ] )

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