Launched at the end of 2021, the recovery bonds (OR) were very successful with businesses from the outset. However, according to France Assureurs, hundreds of millions of euros still remain to be provided and risk not being distributed before December 31, 2023, the deadline for deployment of the system.
“Only the disbursement of funds is authenticexplains Franck Le Vallois, general director of France Assureurs. Interested SMEs and mid-sized companies must therefore come forward as quickly as possible if they wish to benefit from the system in time.”
These subordinated bonds, distributed by seven management companies via the Obligations Relance fund, co-constructed by insurers in cooperation with the professional associations AFG and France Invest and under the aegis of the General Directorate of the Treasury, nevertheless got off to a successful start of wheels. So much so that investor insurers added 1 billion to the initial envelope of 1.7 billion, when the first pocket was exhausted.
800 million to be filled
“As of October 4, 2023, the date of the last reporting, 1.86 billion euros were invested in recovery bonds financing a total of the economic recovery of 202 companies (110 mid-sized companies and 92 SMEs)”, specifies Franck Le Vallois. There are therefore less than three months left for the seven management groups to invest more than 800 million undistributed euros which cannot be disbursed after December 31.
But now, more than recovery bonds, it is participatory recovery loans (PPR) which are on the rise. Not enough to reach the 11 billion euros initially raised, but all the same, business interest in this envelope has (finally) awakened.
Thus, at the end of September, the amount of PPR subscriptions reached 3.37 billion euros compared to 1.7 billion eight months earlier. A clear acceleration which should not run out of steam before December 31, 2023, the deadline for granting loans. “An additional 488 million are already reserved, which would bring the total amount invested to almost 4 billion euros at the end of the year, explains Franck Le Vallois. Which is a very important figure for a market product like this. »
The slow start of PPRs is due to several factors. At the time of their launch in early 2021, companies and banks mainly focused on state-guaranteed loans (PGE) which benefited not only from simplified access, but also from extremely low rates. When the PPRs offered a maturity of 8 years at rates between 4.10 and 5.25%.
In addition, this unique system suffered from unclear communication. Presented by the authorities as quasi-equity, PPRs are legally, accountingly and fiscally considered as debt instruments, particularly in matters of insolvency. The assimilation to equity is only financial. In terms of underwriting, they proved to be more complex than a traditional loan, with submission files requiring extensive documentation and double approval from banks and asset management organizations which must follow these debt lines. Despite a simplification of contracts to facilitate distribution, PPRs did not take off.
The rise in rates benefits the PPRs
However, the rise in rates has made this non-dilutive financing more attractive. And this, despite the tightening of conditions on April 1, which had the effect of increasing their rate by 0.5 percentage points, now between 4.60% and 5.75%. In fact, the profit-sharing component makes it possible to compensate for the interest component. PPRs benefit from hybrid remuneration combining fixed interest and participation in results, which thus makes the interest rate more attractive than a traditional loan or a bond. Furthermore, this is ultra-secure subordinated debt.
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Financing SMEs goes hand in hand with their support
Thus, despite an overall cost of financing established at 4.4% at the end of July by the Banque de France, PPRs are finally attracting SMEs and mid-sized companies. Bercy had already noted an acceleration in participatory recovery loans in the first quarter of 2023 with nearly 500 million euros of PPR distributed in three months by the banks. At BPCE, PPR production doubled in one quarter. Same observation of increase at the Postal Bank or at Société Générale where the distribution of the product increased by 50% over the first four months of the year.
“During 2022, we noticed an increase in the power of the system within the banking networks. And the rise in interest rates has mechanically improved the attractiveness of PPRs compared to other financing methods, thus generating an acceleration in disbursements. notes the general director of France Assureurs.
2023-10-19 15:19:13
#Bonds #recovery
