Schuldschein

A Schuldschein, or Schuldscheindarlehen, is a German law loan governed by sections 488 et seq. of the BGB, the German Civil Code, evidenced by an acknowledgement of debt and placed with institutional investors: insurers, investment funds and banks. Its terms resemble those of a bond. In law it remains a loan: the acknowledgement of debt serves as evidence and does not have the nature of a security. The issue requires neither a prospectus nor a listing. The lender transfers its claim by assignment, with the borrower’s consent, which the contract gives in advance. The claims trade over the counter. The market benchmarks are as follows: a minimum useful amount of around €20m, terms of three to seven years, several maturity tranches, fixed or floating rate, bullet repayment, financial covenants and change of control, negative pledge and cross default clauses, bilateral reporting without an external rating. Preparing the documentation takes three to four weeks and the full process eight to ten weeks. The market issued €8.4bn in the first half of 2025, down 15% year on year. In the second quarter of 2025, German issuers accounted for 62.9% of volumes and French issuers for 6.7%. For a French mid-sized company seeking €50m to €300m, the Schuldschein compares with the Euro PP and the US private placement (USPP).

A French mid-sized company places a €150m Schuldschein with twenty German and Austrian investors, in three tranches: €50m over three years at a floating rate, and €60m over five years and €40m over seven years at a fixed rate.

• The split into maturity tranches and the choice between fixed and floating rate.
• Financial covenants, more frequent than in public bonds.
• The assignment clause and the consent the borrower gives in advance.
• The cost comparison with a Euro PP or a USPP of the same maturity.