Private Capital Solutions for Corporate Borrowers

Private debt has become a serious alternative to high-yield bonds and syndicated bank loans for European corporate borrowers. Funds and other non-bank lenders now provide a meaningful share of mid-market financing, often on terms that neither the loan nor the bond market will match. This briefing sets out where private debt adds value, where it does not, and which borrowers benefit most.

What private debt offers

Speed and decision-making.

A private credit fund can move from first approach to signing in six to twelve weeks. Decision-makers sit close to the credit team and approval does not depend on syndication. The contrast is most pronounced in relation to broadly syndicated loans and bond offerings, which may require ratings, roadshows and syndication for larger ticket sizes. While a relationship bank can also move quickly, the advantage of private credit over a bank is increased certainty for difficult credits, not just speed of execution.

Tailored structures

Private debt accommodates recapitalisations, minority buy-outs, management buy-ins and transitions from corporate to leveraged structures. Funds can take a forward-looking view of cash flow and intangible assets, where banks may tend to rely on hard collateral and bondholders on disclosure and ratings. This makes private debt useful for asset-light businesses and story credits that do not fit standard credit boxes or have less traditional assets to offer as security. Private capital funds may take a more creative approach to securing assets outside the standard asset classes.

Covenants and monitoring

Private credit documentation typically includes maintenance covenants alongside incurrence covenants, which allows early intervention if performance deteriorates. Financial covenants can be calibrated to a borrower's seasonality or working-capital profile, which standardised bond covenants cannot. Lenders monitor actively and engage with management through the life of the loan.

Security and ranking

Most private debt is senior secured, with a tighter security package and bespoke intercreditor terms than the bond market provides. For Danish borrowers, the security package usually combines ejerpantebrev over real estate, virksomhedspant over floating assets and account pledges, which requires careful structuring.

Confidentiality

Private debt avoids the public disclosure that comes with a bond offering. This matters for sponsors preparing acquisitions and for borrowers who prefer not to share detailed financial information with competitors.

What it costs the borrower

Private debt is rarely the cheapest option. Pricing usually exceeds syndicated bank loans and often sits above comparable high-yield bonds, reflecting illiquidity and bilateral underwriting cost. Maintenance covenants give the lender earlier visibility but reduce the borrower's operational headroom. Lender concentration matters, as a single fund or small club may hold the entire facility, so consent rights carry more weight than in a syndicated deal. Base rate floors protect the lender from rate declines, which means the borrower does not benefit fully from a falling-rate environment. Documentation per euro of debt tends to be heavier than for a bond, though more flexible. These are trade-offs, not deal-breakers, but borrowers should price them in.

Which borrowers benefit most

Generally, private debt suits corporate borrowers with the following broad characteristics:

• Mid-market companies below the size or rating threshold for an efficient bond issue.

• Sponsor-backed borrowers funding acquisitions, recapitalisations or refinancings to a defined timetable.

• Asset-light or story-credit businesses where forward-looking cash flow is the right measure.

• Borrowers with seasonal or volatile cash flow that needs covenant calibration.

• Companies in transition (carve-out, turnaround, integration) where execution certainty outweighs headline margin.

• Borrowers requiring confidentiality, including pre-acquisition financing.

• Smaller ticket size borrowers below effective levels of broadly syndicated loans.

• Three to five year time horizons.

Practical points for Danish and cross-border transactions

Private credit transactions with a Danish borrower group involve structuring issues that benefit from early attention. The principal practical points for attention are:

Governing law and forum

English law remains the standard for the facility agreement. Danish security documents are governed by Danish law as the lex situs.

Security package

The standard Danish security package can include:

• Owner's mortgage (Ejerpantebrev) over real estate, and certain other assets, registered in the Land Registry (tingbog). The owner's mortgage stays on title and can be repledged on refinancing without re-registration.

• Floating charge (virksomhedspant) over inventory, receivables, equipment and intellectual property, registered in the personbog. Real estate and shares are excluded.

• Share pledges.

• Account pledges.

• Receivables pledges, either by virksomhedspant or by specific assignment with notice to the debtor (denuntiation).

Stamp duty

Registration attracts a stamp duty (tinglysningsafgift) at 1.5% of the secured amount, plus a minor fixed registration fee. Model this at term sheet stage. Refinancing reliefs exist but the conditions are technical.

Security holding

In a single-lender deal the fund holds the Danish security directly in its own name. In a small club, the security is held pro rata or by one fund as agent under a short-form co-creditor arrangement. A parallel debt structure is not needed at this scale.

Intercreditor

An intercreditor is only required where a super-senior revolving facility, typically from a relationship bank, or a hedging counterparty sits alongside the private credit lender. The document is shorter than in syndicated leveraged finance: no second lien, no mezzanine. The Danish-law overlay covers release of Danish security on enforcement.

Financial assistance and corporate benefit

Section 206 of the Companies Act (Selskabsloven) prohibits a Danish target from providing financial assistance for the acquisition of its own shares, subject to a whitewash under sections 206 to 209 (shareholder resolution, board statement, arm's length terms, distributable reserves). Acquisition financings rely either on the whitewash or on a debt push-down after closing. Upstream guarantees and security from Danish subsidiaries require limitation language reflecting corporate benefit and capital maintenance.

Withholding tax

Denmark does not levy withholding tax on interest paid to unrelated foreign lenders, which makes the jurisdiction attractive for international private credit funds. Anti-avoidance rules apply to related-party interest and to back-to-back arrangements, and fund structures should be tested against these. Gross-up clauses are standard.

Insolvency

Danish proceedings are governed by the Insolvency Act (Konkursloven). Hardening periods apply, with longer claw-back for related parties, and security perfected before the relevant period is generally upheld. Note that Denmark is not a party to the EU Insolvency Regulation as a national opt-out and Danish courts may disregard insolvency proceedings outside Denmark.

Conclusion

Private debt is the right tool for borrowers who value execution certainty, tailored structures and a direct lender relationship, and who can absorb the pricing premium. For straightforward credits in size, the bond and syndicated loan markets remain efficient. The question is not which form of debt is better in the abstract, but which fits the borrower's situation. EThe European private credit market is now mature, with strong liquidity from established funds, and the Danish and Nordic markets remain attractive to direct lenders, given their reputation as creditor-friendly jurisdictions.

Further Information

For more information on banking and finance or capital markets transactions in Denmark, please contact Michael Carsted Rosenberg or Dr. Andreas Tamasauskas at Carsted Rosenberg.

This briefing is intended to provide general information on corporate finance in Denmark. It is not intended to provide definitive legal or tax advice. No legal, tax or business decisions should be based solely on its content. The briefing does not necessarily deal with every important topic and is not designed to provide legal or other advice. It shall not be used as a substitute for legal advice and none may be inferred. It is only intended for general information on matters of interest. While we endeavour to represent the information as accurately and correctly as possible, we cannot accept any responsibility for any errors or omissions.