Finance update: developments in the Dutch debt financing market

The COVID-19 health crisis and its response measures taken by the government, businesses and consumers result in financial pressure for many companies. In the past weeks, we have seen a number of developments in the Dutch debt financing market which we would like to highlight to you:

  • Interest in GO guarantees
    Of the various government measures aimed at addressing liquidity pressure, we have seen particular interest in the GO guarantee scheme. GO is a scheme under which the Dutch state temporarily offers guarantees for up to 80% of certain financial indebtedness (90% for SMEs), with a maximum of EUR 150 mln per company. Two specific concerns voiced in respect of the GO scheme are that the application process may lack expediency and that the application criteria are too restrictive.
  • Increased dialogue between lenders and borrowers
    Many companies are proactively engaging their lenders to discuss liquidity and any other impact the health crisis and its response measures have on their business, and to explore in what ways lenders can support them as circumstances deteriorate.
  • Payment holiday instituted by banks for companies
    A number of banks in the Netherlands have offered a payment holiday to their clients affected by the health crisis and its response measures. The payment holiday does not apply mandatorily as is the case in various other European countries and should be requested by the borrower. The terms and the conditions of the payment holiday measures vary across banks. With a view to the increased dialogue between lenders and borrowers such measures provide an opportunity for short term relief to borrowers.
  • Lenders postponing transactions
    Even though the vast majority of reactions by lenders to their borrowers in the health crisis we have experienced are of a constructive tone, we have also encountered some financiers delaying or postponing their participation in (re)financing transactions in the term sheet or documentation stage. Notwithstanding the continued support of lenders to borrowers in the Dutch market we experience so far, this development may in some cases add pressure to borrowers, arrangers and existing/fellow lenders to find alternative financiers, shift commitment to other lenders or postpone or cancel the transaction. This in turn may pressurise timelines and deteriorate the (re)financing terms available to the borrower.
  • Equity investments swapped for convertible loans
    Please see the M&A section for this.
  • Regional support to start-ups and scale-ups
    Dutch regional development funds have been provided with EUR 100 mln to be able to provide liquidity support to start-up and scale-up companies. Application criteria remain to be confirmed.
  • Urgent new Dutch scheme law
    The Dutch Parliament’s Committee for Justice and Security has ordained that the proposal to introduce a Dutch scheme, a new financial restructuring tool, will be scrutinised on an accelerated basis, within two months by Parliament.
  • Government reinsurance for credit insurances
    The government has announced that it will guarantee EUR 12 bln of credit insurances, following reduction of insurance limits by major credit insurers in the Dutch market.
  • Debt buybacks
    Borrowers which have sufficient liquidity available for such transactions may consider to seek to benefit from the current market turmoil as a result of the health crisis and its response measures by entering into debt buyback transactions of its loans trading below par on the secondary market.
  • Financial covenants
    As financial covenants deteriorate, lenders and borrowers may wish to discuss the option to exclude non-recurring or extraordinary items or utilise built-in mechanisms of EBITDA in credit agreements to this end. Borrowers which can accurately quantify the impact of the health crisis and its response measures will be better suited to discuss such adjustments of financial covenants with their lenders.
  • Payment holiday consumer mortgage borrowers
    Various Dutch banks have offered Dutch consumer mortgage borrowers a payment holiday on consumer mortgage loans. Even though the payment holiday is not instituted mandatorily by the government, as is the case in various other European countries, payment holidays could potentially impact the performance of consumer mortgage portfolios, such as those backing securitisations and covered bond programmes.

If you have any queries or comments, please contact Vasco Hoving (, +31 6 8274 5679) or Wouter van den Wildenberg (, +31 6 1071 9313).