The use of mezzanine in European buyouts fell in 2003, according to the latest figures from ratings agency Fitch. There were fewer transactions using mezzanine in 2003 down from around 40 deals in 2002 to around 35. By value, the decrease was even more marked, down 22.4% from €3.47bn in 2002 to €2,7bn in 2003. By contrast in 2002 the European mezzanine market had witnessed a boom, up by 42%.
Rachel Hardee, director leveraged finance at Fitch Ratings attributes the decrease in transactions and value of the mezzanine market to the improvement in high yield market conditions. She adds that much of the mezzanine issuance has been related to secondary buyout deals and recapitalizations.
By country, France maintained a strong position in the mezzanine market, followed by the UK and Germany where mezzanine contributions declined. The average percentage contribution of mezzanine to the capital structure remained static across Europe.