Private credit fund managers have upped the number of fossil fuel deals that they are doing, as banks exit the space due to climate concerns.
According to data from Preqin, the value of private credit deals within the oil and gas industry was more than $9bn (£7.13bn) during the two years ending 31 December 2023. This compares with just $450m during the previous two-year period.
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Bloomberg has reported that this rise is due to the fact that many traditional banks have exited the loans market for coal, oil and gas as they attempt to green their portfolios and meet their own internal climate transition goals.
This is particularly true for European banks, which are subject to stricter climate regulations than in other jurisdictions.
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BNP Paribas and ING Group are among the banking groups which have publicly increased lending restrictions on fossil fuel loans, leaving a financing gap which private credit funds have raced to fill.
This is evidenced in a recent fundraise by Australia’s Whitehaven Coal Ltd. Bloomberg News reported last week that the coal mining firm secured a $1.1bn loan from 17 private credit lenders and just one bank. The miner is paying 6.5 percentage points over the secured overnight financing rate.
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