Corporate Schuldscheindarlehen (SSD): Default rates remain low, trend towards green products, five VÖB members as market leaders

Corporate Schuldscheindarlehen (SSD): Default rates remain low, trend towards green products, five VÖB members as market leaders

Berlin – Corporate Schuldscheindarlehen (SSD) is an attractive investment opportunity for investors, characterized by low default rates and a growing trend towards "green" products. This conclusion is drawn by an evaluation conducted by the Federal Association of German Public Banks (VÖB) among the leading arrangers in the German SSD market. According to the report, the five VÖB member institutions - BayernLB, DZ Bank, Helaba, LBBW and NORD/LB – dominated the market with a share of 86.5 percent in 2023.

Key findings from 2017 to 2023:

  • VÖB institutions lead the market: The five institutions mentioned successfully arranged SSDs worth over 142 billion euros, holding approximately 84 percent of the market during the review period. The SSDs have been arranged for companies that have a good or very good rating and have a very broad industry diversification. The figures for the individual years can be found in the table below.
  • High credit quality: The SSDs maintained a low average failure rate of 0.27%, derived from the default rates of transactions carried out between 2017 and 2023, relative to the market volume arranged by the VÖB banks. This low default rate corresponds to investment-grade risk, offering investors a high level of security and stability.
  • Trend towards sustainable products: There has been a notable shift towards green and ESG-linked SSDs, in recent years. Since 2021, more than a third of all SSDs arranged by the VÖB market leaders have incorporated sustainability or ESG criteria.

Iris Bethge-Krauß, Managing Director of the VÖB, stated: "I am very pleased that the market leaders in this segment are among our member institutes. SSDs play an important role in the financing of German SMEs. The VÖB banks are particularly well represented here. Our association will continue to actively support them in this."

SSDs are a form of debt financing, primarily for medium-sized companies. It is a loan that is concluded between a company and usually several institutional investors (such as banks and savings banks, insurance companies or pension funds). The terms usually vary between two and ten years, with fixed or variable interest rates. SSDs are not traded on an exchange and can be tailored to meet the specific needs of the company and the investor. Compared to other forms of financing, the cost of issuing an SSD is very low.

A table about the volume, market share and default rate of the promissory note loans arranged by the six VÖB market leaders can be found in our press release