Schuldschein is gaining in popularity as an alternative type of investment. Why so?

With issues of EUR 20.2 billion, 2015 was a record year for corporate Schuldscheine – an increase of 67% compared to 2014. And 2016 could be even better. Where does this success originate from?

Over the last few years, the market for 'Schuldscheindarlehen' (Schuldschein loans) to private companies has grown substantially. That growth was particularly turbulent in the wake of the financial crisis, with a few notable peaks. 2008 was such a peak year, with almost double the volume of 2007. The record of 2008 fell last year, with a volume of EUR 20.2 billion. And 2016 has also been quick out of the starting blocks. Raoul Heßling, Schuldschein expert at BNP Paribas:

"We are expecting a volume of more than EUR 5 billion in the first quarter, with a good mix of large and small companies, both in Germany and abroad. If the trend continues, 2016 will surpass 2015."

Annual Corporate Schuldschein Volume and Deal Flow

(Source: Thomson Reuters LPC)

The main reason for those record years is the volatility of the bond market. At that level, 2008 was a difficult year, with much economic nervousness and the bankruptcy of Lehman Brothers. Raoul Heßling:

"The Schuldschein market is very stable and is well-shielded from that sort of volatility. The system is normally used by mid-cap companies that are not listed on the stock exchange. Due to the difficult circumstances in 2008, during which the bond market practically stalled for a period, some companies noted that Schuldscheine could be a good alternative. I am referring to names such as BMW, Daimler, Siemens and Deutsche Telekom. As a result, the volume soared to around EUR 19 billion in 2008."

The worst loss was suffered in 2009. The bond market picked up again and Schuldscheine returned to their normal volume and users. From 2010 to 2014, the volume fluctuated around the normal EUR 10 billion and users were mainly mid-cap companies. And then came the peak of 2015. Raoul Heßling:

"With more than EUR 20 billion, that was a new record year. I see various reasons for this. Firstly, the Schuldschein has become better known as a financing tool, among both issuers and investors. Secondly, there was more merger and acquisition activity over the past year. Quite a number of companies have discovered that Schuldscheine are an efficient way to raise money. Thirdly, the bond market returned to being volatile in the second half of the year and listed companies gravitated towards the Schuldschein market again. ZF Friedrichshafen, a global player in the automobile sector, entered into a record deal of EUR 2.2 billion, for instance, while Daimler and Mann+Hummer each entered into transactions of EUR 1.1 billion."

Meanwhile, 2016 looks to be on course to match or surpass 2015. Is this becoming the new norm for Schuldscheine? Raoul Heßling remains cautious: "I am in no position to make forecasts."

Largest deals of 2015




Deal Size (€)


ZF Friedrichshafen
































Hamburger Energienetze







(Source: Thomson Reuters LPC)



Schuldschein: German export for the financing market

In 2015, Germany and Austria jointly made up 85% of the Schuldschein market. But interest is growing in other European countries, including Belgium.

Schuldschein: the word sounds unmistakably German. Indeed, our eastern neighbours have had the product for decades, and there were even predecessors that proved their worth a few centuries ago. Earlier issuers were mainly the government, at all levels. The federal states (Bundesländer) and the municipalities used this instrument to finance investments, while credit institutions also used Schuldscheine in a number of ways, including in refinancing programmes.

An increasing number of companies have recently been using Schuldscheine to raise money. These have typically been German mid-cap companies that are not listed on the stock exchange. Over the last few years, larger, listed companies have also started to enter the Schuldschein market.

What exactly is a Schuldschein? A Schuldschein is a credit facility agreement, concluded directly between a debt issuer and an investor, which a bank uses to structure the transaction. The issuer issues negotiable securities that represent the claim for repayment, in exchange for an investor lending a monetary amount on a medium or long-term basis.

What are the main differences between Schuldscheine and other forms of market financing?

  1. Schuldschein versus classic investment credit The claims under a Schuldschein agreement are more liquid than in case of a classic investment loan. They can be circulated among different investors just like financial securities.
  2. Schuldschein versus syndicated loans In contrast to a syndicated loan, the creditors are not connected to each other. A majority is therefore not needed for decisions. Schuldschein versus a bond issue In contrast to a bond issue, the security is not revalued on a daily basis, so the accounting also differs.

Corporate Schuldschein volume per country

(Source: Thomson Reuters LPC)

Until a few years ago, Schuldscheine did not exist outside German-speaking countries. German and Austrian companies still dominate the market today. In 2014, 69% of the volume was made up by German companies. In 2015, that figure increased to 75%. German companies issued EUR 8.3 billion of Schuldscheine in 2014, and EUR 15.2 billion in 2015. Raoul Heßling, the Schuldschein expert at BNP Paribas points out that last year's picture is somewhat inflated by a number of very large transactions:

"2015 was an exceptional year with three very large German Schuldschein transactions. These jointly represent more than one-fifth of the total issued volume. But it is entirely possible that the share of other European countries will increase more than that of Germany in the years to come. The system is already well-established in France, for instance: that country represented 8% and 7% of the market in 2014 and 2015 respectively. Over the same period, the Netherlands increased from 1% to 2%, while Belgium increased from 0% to 1%. The general trend is clear: internationalisation. Schuldschein remains a typically European story. I can see it developing into the European equivalent of private placement in the United States."



Schuldschein benefits: simple, flexible and also discreet on request

Discretion is a major advantage of the Schuldschein. The product is moreover quick, flexible and involves relatively little documentation.

Discretion is what German companies have valued about Schuldschein for centuries. Mid-cap or family companies do not always want big media headlines regarding their financial transactions. A Schuldschein is a credit facility agreement that is concluded directly between a borrower and an investor. If a company wishes to capitalise on advertising, it can. However, by means of a simple request, the deal can also be handled very discreetly.

There are other advantages to Schuldschein besides privacy:

  • It is an efficient way for companies to diversify their investment base, away from the traditional partner bank.
  • The Schuldschein allows a company to have recourse to the capital market without burdensome processes and conditions in relation to rating. Investors carry out their own analysis.
  • The documentation involved in a Schuldschein agreement is less prescriptive than in case of a bond loan. It can therefore be simpler and more concise. Fifteen pages is not unusual, particularly for a Schuldschein with a low risk profile (e.g. an issuer from the public sector).
  • A Schuldschein is also flexible: it can be tailored to simple loans or complex, structured deals. The Schuldschein can be brought into line with existing financing instruments of the company and take over the securities and covenants.
  • The transaction can be organised quickly.
  • No minimum volume is expected. In the stock market, that quickly amounts to EUR 500 million. In the Schuldschein market, it is around the EUR 100-150 million mark, although EUR 50 or 300 million are equally possible.
  • The Schuldschein is also more flexible than the stock market. The amount may be distributed across different maturities and currencies. For example, maturities can be placed in parallel at 3, 5, 7 and 10 years. Those tranches must then be refinanced every two years, making one less dependent on current market circumstances. This provides an answer to the bullet repayment issue, which features in the stock market.

Maturities are increasing

Schuldschein maturities have been increasing over the last few years. In 2012, maturities of less than three years accounted for 17% of the market, and maturities of more than seven years for 19%. In 2015, those figures were 8% and 34% respectively. The current average is 6.6 years.

(Source: Thomson Reuters LPC)


Schuldschein investors are often insurance companies, pension funds and credit institutions, particularly savings banks and cooperative banks. What attracts them to Schuldscheine?

  • The product offers spreads and maturities that are not available in the syndicated loans market.
  • Because of the lower amounts, more investors can access the market.
  • Investors also gain access to organisations and companies that do not operate in the bond market.
  • Due to the flexibility of the Schuldschein, there is something to suit every investor's tastes. Institutional investors, for example, often choose fixed coupons with a longer maturity, while commercial banks prefer medium-term maturities and variable interest coupons.

Role of the bank

The bank is often designated by the issuer to organise the loan payments. The bank plays the role of 'arranger' in that case, explains Raoul Heßling, Schuldschein expert at BNP Paribas:

"The bank advises the customer on the structure of the Schuldschein, maturities, types of interest and the content of the documentation. We also prepare a profile of the issuer and a presentation for potential investors in conjunction with the company. We obviously also use our network to approach those investors."



Businesses stand to benefit from switching to electric and multimodal mobility

BNP Paribas Fortis is ready for the mobility of tomorrow. And Laurent Loncke, General Manager Retail Banking and member of the bank’s management committee confirms this when he says “We do much more than lease electric vehicles”.

How can companies leverage mobility as part of their transition?

"If we look at vehicle usage alone, switching from fossil fuels to electric energy can reduce CO2 emissions by a factor of four. This transition is being encouraged in our country more than ever by tax incentives and tax breaks. From 2035, the European Union will also ban the sale of cars with combustion engines. Whether it’s for the company fleet or company cars for employees, electric driving is the way forward, alongside other forms of mobility."

Are all businesses aware of this?

"These days, two out of every three new vehicles are company cars. And 80% of those orders are electric vehicles, a trend that is also apparent at our partner Arval."

So companies are playing a pioneering role in this transition?

"Certainly. First and foremost because former company cars find their way to the second-hand market at some point, making electric driving more accessible for everyone. Secondly, by choosing an electric car, you can encourage your friends and family to follow your example. Our recent Profacts survey (only in Dutch and French) showed that 85% of electric vehicle owners are satisfied to very satisfied that they switched to an electric vehicle. However, 42% of Belgians are still reluctant. Half of them are worried their battery will run out before they can get to a charging point."

Is their fear justified?

"Not really. Most drivers only feel comfortable with a range of 500 kilometres, even if they only drive a few dozen kilometres a day. It’s true the charging network does need to be developed further. Many people, especially those living in cities, cannot install a charging point at home. BNP Paribas Fortis is contributing to the expansion of the charging network through its participation in Optimile. This Ghent scale-up offers software solutions for charging electric cars and is developing strategic partnerships for the installation and maintenance of charging points."

Can an electric car be part of each employee’s remuneration package?

"Today, there are already less expensive vehicles on the market, making electric driving an option for middle and lower-management. The Total Cost of Ownership of an electric car is the most important factor, however. And this is still much lower than that of a vehicle with a combustion engine. Leasing is often the best solution. We have a comprehensive, tailor-made offering for all companies, regardless of their size and needs."

What exactly do you mean by a 'comprehensive offering'?

“In addition to leasing, we are able to offer charging solutions at home or at work, a charging card for public networks, the automatic reimbursement of electricity consumption at home, an app to find charging stations, and electric driving training through our many partners.”

So a complete ecosystem?

"We want to contribute to the mobility of tomorrow. By financing it, through credits or leasing, and with insurance, but also by working with partners outside our traditional activities. Like Optimile, and Touring, an organisation that is synonymous with reliability."

But mobility isn't just about cars, is it?

"We believe we need to rethink our relationship with the car. Given the climate targets and the increasing scarcity of resources, it is simply not possible to replace every internal combustion engine with an electric car at the moment. Arval offers its extensive expertise to companies considering a different approach to mobility. We help them analyse their needs, propose alternatives to the car, establish a mobility budget or draw up a mobility policy. We offer bicycle leasing, sometimes in combination with car leasing. We strongly believe in multimodality and mobility-as-a-service solutions: the option to combine different transport modes and pay for them without too much hassle. This is also one of the specialities of our partner Optimile."

Are companies and their employees open to this idea?

"The idea of employees no longer saying 'I have this amount for my car in my salary package', but rather 'I have this amount for my mobility'  is gaining traction. People are already paying for use rather than ownership in gyms or for streaming services. Mobility is going down the same route, with car-sharing and flat-rate subscriptions, making costs more predictable for businesses and private individuals. But the pace of change will also depend on the success of the federal mobility budget. For now, uptake is slow."


BNP Paribas Fortis SA/NV – Montagne du Parc/Warandeberg 3 – 1000 Brussels – VAT BE 0403.199.702 – RPM/RPR Brussels

Optimile SA/NV – Sassevaartstraat 46 bus 204, 9000 Ghent – RPM/RPR Ghent – VAT BE 0648.837.849 – – BNP Paribas Fortis SA/NV holds a greater than 10% stake in Optimile SA/NV.

Arval Belgium NV, Ikaroslaan 99, 1930 Zaventem – Brussels Register of Companies – VAT BE 0436.781.102.

Touring SA/NV, Koning Albert II-laan/Avenue Roi Albert II 4 B12, 1000 Brussels – Brussels Register of Companies – VAT BE 0403.471.401, is registered under this number with the FSMA, Rue du Congrès/Congresstraat 12-14, B-1000 Brussels, and acts as an associated agent on commission for AG Insurance SA/NV. AG Insurance SA/NV owns a greater than 10% stake in Touring SA/NV.


Investment grants for your business

Belgium’s three regions provide a range of grants for companies and self-employed people making investments. Our experts can help you make sense of the situation and submit your application.

The terms and amounts of investment grants vary greatly from one region to another. The applicable rules depend on the location of the operational entity making the investments. The company’s registered office is not relevant and can be located in any country. You should also bear in mind that applying for a grant is still a fairly cumbersome administrative process. That’s why our experts take care of all the steps, from submitting the grant application to collecting the grant money.

Flanders: a range of grants

Various types of grants are available in Flanders, the most important of which are support for strategic transformations, the ecology bonus, strategic ecological support, the SME e-wallet and the SME growth subsidy.

Each type of support targets different types of investment and different companies. Subsidy levels also vary widely, from 8% for a strategic investment by a large company to 50% for consultancy fees paid by an SME.

Our experts can help you identify subsidy opportunities and then arrange for you to meet a specialist from VLAIO, the Flemish Agency for Innovation and Entrepreneurship, who will then help you with the rest of your application.

Wallonia: traditional and ecological aid

In Wallonia, investment grants are reserved for companies operating in a limited number of eligible sectors. Excluded activities include retail, transport and the liberal professions.

The terms and conditions also differ according to the size of the company. Small businesses must invest a minimum of €25,000. Large companies need to reach higher thresholds and invest in a development zone.

Examples of eligible business investments include buying/building a property, buying land and buying new business equipment.

The basic grant varies from 4% to 6%, but can be higher if the applicant creates jobs, takes an innovative approach or diversifies abroad, for example. A larger grant, up to 20%, may be obtained for projects that promote the sustainable use of energy and environmental protection.

Please note that it is essential to submit the request before any firm investment commitment is made: investments for which you have already accepted a quote can no longer be subsidised.

Our experts can guide your company through the entire process.

Brussels: the most generous

The Brussels subsidy for investments in goods, property or works is open to most sectors. In total, around 80% of the capital's economic activities are eligible for grants. The two main exceptions are education and real estate.

To qualify for a grant, the investment project must be worth at least €10,000 for a start-up business and at least €15,000 in other cases, depending on the size of the business. In addition, it must aim to develop or improve an existing activity: simple replacement expenditure does not qualify.

The aid can amount to up to 30% of the investment, although the average is 12.5%. The level of subsidy depends on a number of criteria, such as whether the company is a start-up and whether the investment will increase the number of people employed by more than 30%.

Over the course of 2024, reforms to the aid system will increase incentives for sustainable and circular economy projects.

Please note that it is essential to submit the request before any firm investment commitment is made: investments for which you have already accepted a quote can no longer be subsidised.

Our experts can guide your company through the entire process.

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