image missing on blob storage!!!

How to offend a Schuldschein banker

07 March 2018
Charlie Corbett

Private placement anyone? I mentioned it once and certainly didn’t get away with it.


In the infamous ‘Germans’ episode of UK comedy Fawlty Towers, the premise of the joke is that, in a desperate bid not to offend his German guests, Basil manages, by the end, to cause great offence.

I felt some empathy for Basil, back in September. I was chairing a panel on European direct lending and found myself, quite unintentionally, offending a German. It was all because of Schuldschein.

I made the mistake of referring to the Schuldschein market as a kind of German proxy to the wider European private placement market. It was a suggestion that turned my German friend and fellow panellist, puce. Suffice to say, he made it abundantly clear that first, a Schuldschein deal could in no way be compared to one of those pound-shop European private placements (he didn’t say pound shop), and second, I should jolly well brush up a bit on my research.

You see, to those in the Schuldschein market, the Schuldschein is a sacred object. Comparing it to a bog standard private placement is like telling a Michelin-starred chef that his filet mignon in sauce béarnaise is merely a steak with onion gravy. I didn’t realise this at the time. Schuldschein – as any self-respecting German financier will tell you - is a properly grown-up, uniquely German debt instrument designed to help sensible, smaller German companies to grow their businesses. Full stop.

And so that is why, when I saw that failed UK contractor Carillion was loaded up with €131m-equivalent of Schuldschein debt, I was more than a little wide-eyed in astonishment. What on earth was this lumbering, unsafe, non-German credit doing raising money in such a rarefied and unsullied market? And then, just days later, I saw that yet another failing non-German conglomerate – this time the South African retail giant Steinhoff International - was also loaded up with Schuldschein debt.

“What on earth is going on?” I thought to myself, as I rummaged around in my desk in search of my German friend’s business card so I could give him a call. I never did find his card, so I was unable to get an answer to the question: at what point does a Schuldschein deal stop being a Schuldschein deal and merely become a dodgy, steak-and-onion private placement? Luckily I’m going to be at our Schuldschein event in Frankfurt on 14th March so I will have the opportunity to ask then, and hopefully not offend too many Germans into the bargain.

Event, Articles and Videos that might interest you

What are Schuldscheine an alternative to?

22 February 2018 | Richard Kemmish

The recent growth of the schuldscheine market is not a reflection of anything inherent to the market itself but a reflection of the extraordinary things that are going on in the markets that are adjacent to it. Several articles recently have questioned the future direction of the market – has it stopped being German in anything but name? Is it in credit-denial? Are participants undergoing behavioural changes (no more Mr Nice Guy)?

What are Schuldscheine an alternative to?

| Richard Kemmish

The recent growth of the schuldscheine market is not a reflection of anything inherent to the market itself but a reflection of the extraordinary things that are going on in the markets that are adjacent to it. Several articles recently have questioned the future direction of the market – has it stopped being German in anything but name? Is it in credit-denial? Are participants undergoing behavioural changes (no more Mr Nice Guy)?