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ARTICLE · 21 APRIL 2025

AIFMD II Leverage Limits And Single Borrower Exposure Restriction

Bryan Cave Leighton Paisner
Bryan Cave Leighton Paisner
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Bryan Cave Leighton Paisner

Bryan Cave Leighton Paisner

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The leverage and single borrower exposure limits apply to "loan-originating AIFs", which are defined as alternative investment funds ("AIFs") established in the EU...

United KingdomFinance and Banking
Matthew Baker
Matthew Baker
Damien Luqué
Damien Luqué
William Trotman
William Trotman

Summary

AIFMD II1introduces substantial changes to the EU-wide regulatory framework for alternative investment fund managers ("AIFMs") that was established under AIFMD. The changes cover a wide range of areas but will have a particularly significant impact on funds that originate loans. Among the new rules on loan origination activities are leverage limits and single borrower exposure limits which are particularly relevant for the use of back-leverage by private credit funds operating in the EU. These new rules will also be relevant for AIFMs in the UK managing credit funds located in the EU.

Which funds are within scope?

The leverage and single borrower exposure limits apply to "loan-originating AIFs", which are defined as alternative investment funds ("AIFs") established in the EU whose investment strategy is mainly to originate loans or whose originated loans have a notional value that represents at least 50% of their NAV.

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