Asset-backed finance (ABF) has been heralded as the next frontier for private credit in Europe, in the wake of bank retrenchment and evolving regulatory capital considerations. Already a well-established segment in the US, ABF has become a focus for global credit investors looking for private credit deployment opportunities in Europe outside of traditional direct lending, with attractive potential yields, offering diversification within portfolios, and downside protections. As a result, an increasing number of private fund sponsors are looking to create dedicated pools of capital to pursue ABF strategies in Europe.

James Oussedik, John Goldfinch and Jon Burke provide a nuanced overview of this dynamic and exciting space.