UK & Ireland Autumn Update
- Across the UK and Ireland, we’ve provided £1.6bn(1) of funding YTD reflecting our relationship focus, patient approach to investing, and ability to underwrite through economic uncertainty.
- 75% of lending on a bilateral basis and, in line with historical trends, split roughly 50:50 between portfolio borrowers and new names.
- In the lower mid-market, we have continued appetite to fund across the capital structure across senior debt, subordinated debt and minority equity to support both non-sponsored and sponsored transactions.
Key USPP themes
- Publics using Privates - as issuance and price discovery in public markets became increasingly challenging, the private market stepped into the gap, with Pricoa able to underwrite benchmark issue sizes.
- Pricoa Shelf gives strong optionality - we have provided over £600m in Shelf facilities – in times of uncertainty, corporates have increasingly valued enhanced optionality and quick access to long term capital.
- Tight coupon ranges across tenor - relatively benign spread curve driving attractive all-in coupons on longer dated capital.
- Euro pick up - Euro coupons remain 100-150bp inside comparative GBP pricing.
- Fixed vs. Floating - the modest delta between floating and fixed spreads currently attractive in context of market uncertainty and refinancing risk.
Sample 2022 Transactions
![](https://cdn.prod.website-files.com/62e3e0f0184f37a17997cde2/636d68ac8b907f1989f5d197_SSE-thumbnail.png)
![](https://cdn.prod.website-files.com/62e3e0f0184f37a17997cde2/636d68f74b90015aaac7aacf_Big%20Yellow-thumbnail.png)
![](https://cdn.prod.website-files.com/62e3e0f0184f37a17997cde2/636d693f4b900131abc7b15c_SPS-thumbnail.png)
Rate Environment
Fed raised rates another 75bp last week in response to inflation, tight labour market and resilient consumer demand. As expected, BofE followed suit with a 75bp step up to 3% which had been priced in by a market which continues to see a peak in rates in mid-to-late 2023.
While tone on both sides suggests more modest future increments, the Fed communicated a slightly more optimistic view on the economy, while the BofE pointed towards a recession through 2023 in both published scenarios with the resilience of inflation and wage growth likely determining factors.
The market reaction has been muted given announcement followed expectations; while the magnitude of future uplift is debated, the directional trend into 2023 at least seems more clear.
![](https://cdn.prod.website-files.com/62e3e0f0184f37a17997cde2/636e6a001316255340d848ab_10yr%20gilts.jpg)
![](https://cdn.prod.website-files.com/62e3e0f0184f37a17997cde2/636e6a1d4fd41c1f82f33cb0_sonia%20euribor%20curves.jpg)
(1) Calculated using FX rate of 1.15 USD:GBP.
For more information regarding Pricoa Private Capital’s capabilities, please contact:
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