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Briefing

ECB Guidance on Leveraged Transactions

Highly leveraged borrowers present an increased credit default risk for the banks which finance such borrowers. In order to address this risk, the European Central Bank (ECB) published guidance on 16 May 2017 in relation to leveraged transactions, which will be applied six months after this publication. Banks are now in the process of considering the impact this guidance might have on their ability to provide debt finance at certain leverage levels in the future, particularly in an acquisition finance.