NEW YORK CITY-The New York Post recently reported that European banks were planning to cut their lending volume by a whopping $175 billion (US). That spells good news for lenders who can swoop in and fill that gap. And that’s exactly what Newark-based Prudential Financial Inc. intends to do.
In an exclusive interview after Pru’s Tuesday morning Global Economic and Retirement Outlook briefing, David M. Durning, senior managing director of originations and agency lending for Pru Mortgage Capital, told GlobeSt.com that the firm is pushing into Europe. “The bank pull-back is a perfect opportunity for senior lenders to broaden their trade in Europe. They’re a scarce commodity.”
For fixed-income investors, he continued, “it also represents a yield opportunity vs. what they could get in the United States.”
As in the US, “some markets are more stable than others in the Eurozone,” observed Global Real Estate Finance MD Jack Taylor, who explained that on the fund front, Pru has had a footprint in Europe for years. “The risk/return is an opportunity for many investors.”
But while the lending cutback underscores the dire straits of European capital flows, it also highlights the willingness to swallow bitter pills. As was discussed during the briefing, the Eurozone crisis is actually a bit more secure than it was a few months ago.
John Praveen, MD and chief investment strategist for Pru’s International Investment Advisers, pointed out that all of the factors that drove markets in 2012 are still in play. And with Germany committed to keeping the Eurozone afloat, the worst might really be over for the European capital crisis.
As the report issued by Pru stated, “The developed world economies continue to be weighed down by a variety of structural factors, but as time passes and we gain greater distance from the financial crisis, we see signs of healing. While the Eurozone crisis could intensify again. The political progress has been slow, but we think things are headed in the right direction.”