Loan Market Panorama

Loan Market Panorama in Belgium

1.Loan Market Panorama in Belgium

1.1 Impact of Regulatory Environment and Economic Cycles

How has the impact of recent economic cycles and the regulatory environment affected the direction and trends of the loan market in your country?

Loan markets remain solid in Belgium, as in the rest of Europe, despite global geopolitical uncertainties. The market is very competitive, including on terms and pricing. The market is dominated by Belgian/Benelux banks, with large international banks having a fair share of the upper-mid market segment. Institutional investors have entered the lending space, particularly in infrastructure finance and real estate finance.

There have been developments, similar to other European jurisdictions, in relation to negative interest rates, with discussions from some lenders on floors (zero floors).

1.2 The High-yield Market

What role has the high-yield market played in the emerging trends and how has this affected financing terms and structures?

The high-yield market is still relatively modest in Belgium. Bond issues have seen an increase in recent years, but mostly from large corporates, real estate companies and financial institutions.

1.3 Alternative Credit Providers

Has the loan market in your country seen a significant growth in alternative credit providers and, if so, to what extent has this affected financing terms and structures?

We have witnessed growth, but relatively modest. The lending market is still largely dominated by traditional bank lenders. As a relatively small economy in which the central role is played by small and midsized companies, the market is perhaps not a top priority for alternative lenders.

In the space of infrastructure and real estate, we have seen a development of lending activity by insurance companies. Given Solvency II rules, we are also seeing increase interest from insurance companies to enter the private equity financing space.

Some niche markets are also more active for some debt funds, for instance the diamond trade financing sector (Antwerp) from which most traditional lenders have retreated.

1.4 Banking and Finance Techniques

In general, in what other ways are banking and finance techniques evolving to reflect the investor base and needs of borrowers?

We have witnessed increased multiple layer financing techniques, including mezzanine financing, in recent years. Belgium generally follows the example of developments in neighbouring countries such as the Netherlands and the UK, in particular for larger syndicate/club deals.

For smaller ticket work, the financing techniques remain relatively unchanged, and is dominated by the local household banks.

1.5 Legal, Tax, Regulatory or Other Developments

Have there been, or are there expected to be, any recent legal, tax, regulatory or other developments that have had or are likely to have a significant impact on the loan market in your country?

The new Belgian Company Code has entered into force, which has some consequences for lenders and borrowers in financing transactions. Most companies will have to adapt to the new company code, and amend their articles, in the coming years. Some company forms will disappear, and some mandatory provisions will already start to apply from 1 January 2020.

A recent Belgian law on taking security over movable assets has also had a significant impact, by putting in place an efficient and cost-effective electronically registered pledge over movable assets. It has had particular impact on trade and inventory/asset based finance and has required lenders holding security to convert such into the new registered pledge.

A reform of contracts and non-contractual obligations is also in preparation, although the timing thereof it uncertain.

Table of contents – banking law in Belgium

par Anders Noren.

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