Macfarlanes advises Muzinich & Co in respect of the leverage arrangements for its first ELTIF

12 December 2019

Macfarlanes has advised Muzinich & Co, the corporate credit management specialist, on a leverage facility for its first European Long-Term Investment Fund (ELTIF), Muzinich Firstlight Middle Market ELTIF.

This fund invests mostly in syndicated loans and private debt instruments, and may also invest in bonds and junior investment opportunities. As an ELTIF, it is only able to leverage certain types of investment and is subject to both a 30% borrowing restriction and a 30% encumbrance restriction. This has led to the need to create a bespoke but flexible financing structure. It is one of the first ELTIFs to be launched and perhaps the first to have leverage.

The Macfarlanes team was led by finance partner Richard Fletcher, with assistance from finance solicitors Christopher Orford and David Ward. Tax advice came from tax and reward partner Damien Crossley and solicitor Shaul Steinberg, with investment management expertise provided by investment management partner Samuel Brooks.

Richard Fletcher comments: “We are delighted to have helped Muzinich & Co with this technically challenging and innovative financing. We are seeing a number of managers using leverage (and private CLOs) for their credit funds at present and expect that to continue for some time to come.”