IDEAS home Printed from https://ideas.repec.org/p/cbi/fsnote/1-fs-25.html
   My bibliography  Save this paper

Specialist Property Lenders and Private Credit: Financial Stability Considerations

Author

Listed:
  • Moloney, Kitty

    (Central Bank of Ireland)

  • O'Gorman, Paraic

    (Central Bank of Ireland)

Abstract

In this Note, we focus on non-bank lenders that lend almost exclusively to the commercial real estate (CRE) sector and are set up as Special Purpose Entities. These Property SPEs (PSPEs) are typically sponsored and financed by international financial intermediaries that engage in the private credit markets. They also rely on third party financing thatis highly concentrated in the European banking sector. PSPEs represent the majority of new lending by non-bank lenders to the CRE sector and they typically provide large loans to developers (€8.3mn average loan size). This activity benefits the domestic economy by deepening and widening the availability of credit to a supply-constrained property development sector. Increased sensitivity of domestic credit provision to international financial conditions, concentration risk, and exposure to opaque international private credit markets are key financial stability risks stemming from PSPEs. A reduction in credit supply from PSPEs could directly affect the real economy through the property market channel and indirectly through spillover effects to the broader financial system.

Suggested Citation

  • Moloney, Kitty & O'Gorman, Paraic, 2025. "Specialist Property Lenders and Private Credit: Financial Stability Considerations," Financial Stability Notes 1/FS/25, Central Bank of Ireland.
  • Handle: RePEc:cbi:fsnote:1/fs/25
    as

    Download full text from publisher

    File URL: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/specialist-property-lenders-and-private-credit.pdf?sfvrsn=bd366b1a_7
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Galstyan, Vahagn & Maqui, Eduardo & McQuade, Peter, 2021. "International debt and special purpose entities: Evidence from Ireland," Journal of International Money and Finance, Elsevier, vol. 115(C).
    2. Godfrey, Brian & Killeen, Neill & Moloney, Kitty, 2015. "Data Gaps and Shadow Banking:Profiling Special Purpose Vehicles’Activities in Ireland," Quarterly Bulletin Articles, Central Bank of Ireland, pages 48-60, July.
    3. Lambert, Derek & Mahony, Michael & McGeever, Niall, 2024. "The financial resilience of Irish CRE borrowers," Financial Stability Notes 4/FS/24, Central Bank of Ireland.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Barrett, Dominick & Godfrey, Brian & Golden, Brian, 2016. "New Data Collection on Special Purpose Vehicles in Ireland: Initial Findings and Measuring Shadow Banking," Quarterly Bulletin Articles, Central Bank of Ireland, pages 71-84, October.
    2. Karl Michael Beyer & Lars Braeutigam, 2016. "Das europaeische Schattenbankensystem: Typologisierung und die Bewertung regulatorischer Initiativen auf europaeischer Ebene," ICAE Working Papers 56, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    3. Fiedor, Paweł & Killeen, Neill, 2021. "Securitisation special purpose entities, bank sponsors and derivatives," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    4. Kitty Moloney & Oisin Kenny & Neill Killeen, 2016. "Network analysis using EMIR credit default swap data: micro-level evidence from Irish-domiciled special purpose vehicles (SPVs)," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Combining micro and macro data for financial stability analysis, volume 41, Bank for International Settlements.
    5. André Sanchez Pacheco, . "Consolidated foreign wealth of nations: Nationality-based measures of international exposure," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    6. Emter, Lorenz & McQuade, Peter & Pradhan, Swapan-Kumar & Schmitz, Martin, 2024. "Determinants of currency choice in cross-border bank loans," Working Paper Series 2918, European Central Bank.
    7. Grillet-Aubert, Laurent & Haquin, Jean-Baptiste & Jackson, Clive & Killeen, Neill & Weistroffer, Christian, 2016. "Assessing shadow banking – non-bank financial intermediation in Europe," ESRB Occasional Paper Series 10, European Systemic Risk Board.
    8. Molitor, Philippe & Doyle, Nicola & Hermans, Lieven & Weistroffer, Christian, 2016. "Shadow banking in the euro area: risks and vulnerabilities in the investment fund sector," Occasional Paper Series 174, European Central Bank.
    9. Hallissey, Niamh, 2016. "Interconnectedness of the Irish banking sector with the global financial system," Quarterly Bulletin Articles, Central Bank of Ireland, pages 66-82, January.
    10. Golden, Brian & Maqui, Eduardo, 2023. "How ‘special’ are international banks sponsoring Irish-resident SPEs?," Finance Research Letters, Elsevier, vol. 52(C).
    11. Moloney, Kitty & O'Gorman, Paraic & O’Sullivan, Max & Reddan, Paul, 2023. "Non-bank lenders to SMEs as a source of financial stability risk – a balance sheet assessment," Financial Stability Notes 11/FS/23, Central Bank of Ireland.
    12. Ronald B. Davies & Neill Killeen, 2018. "The Effect of Tax Treaties on Market Based Finance: Evidence using Firm-Level Data," Working Papers 201818, School of Economics, University College Dublin.
    13. Guagliano, Claudia & Mazzacurati, Julien & Kenny, Oisin & Braunsteffer, Achim, 2019. "Use of credit default swaps by UCITS funds: evidence from EU regulatory data," ESRB Working Paper Series 95, European Systemic Risk Board.
    14. Dominick Barrett & Brian Golden & Eduardo Maqui, 2017. "New data collection on SPVs in Ireland: findings and implications for the measurement of shadow banking," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Statistical implications of the new financial landscape, volume 43, Bank for International Settlements.
    15. Sanchez Pacheco, André, 2022. "A consolidated-by-nationality approach to Irish foreign exposure," International Economics, Elsevier, vol. 170(C), pages 235-247.
    16. Lars Bräutigam & Karl Michael Beyer, 2016. "Das europäische Schattenbankensystem," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 154, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    17. Brian Golden & Eduardo Maqui, 2024. "What ‘special purposes’ explain cross-border debt funding by banks? Evidence from Ireland," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(3), pages 761-783, August.
    18. International Monetary Fund, 2016. "Ireland: Financial Sector Assessment Program: Technical Note-Asset Management and Financial Stability," IMF Staff Country Reports 2016/312, International Monetary Fund.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cbi:fsnote:1/fs/25. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Fiona Farrelly (email available below). General contact details of provider: https://edirc.repec.org/data/cbigvie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.