France is often discussed in the context of the European Union, which is in the midst of major overhauls of the business and finance community. While France is directly impacted by the array of new regulations in the works among EU authorities – including cross-border lending and payments regulation, bank industry overhauls and SME financing rules – the nation has its own robust SME community, particularly in the technology and IT sector. What’s more, French businesses are among the world’s most global, which presents unique benefits and challenges to the economy.
Also last week, Moody’s released a report that showcased France’s handling of small business lending as one that exemplifies how the rest of Europe could perhaps tackle the issue. As Europe looks to streamline and disintermediate its banking system, Moody’s concluded that the recent CLO transaction by French portfolio management firm GIAC Gestion “illustrates how securitization can finance SMEs and mid-caps without the direct involvement of an originating bank,” according to Moody’s Vice President and Senior Analyst Monica Curti, who also authored the report, “The French Market Shows That Bank Disintermediation Is A Viable Way Forward for European SME CLOs.”
Compare with standardized EU CLOs, Moody’s found, GIAC’s transaction offers cheaper financing to SMEs while still protecting the interests of investors. Even with France’s recession, the transactions are performing “in line with expectations,” Curti added.