Ireland to permit hedgefund loansto companies

Ireland, one of the biggest hubs for funds in Europe, will allow hedgefunds based here to lend to companies under new rules drawn up by the Central Bank, it said.

With banks in the rest of Europe still reducing lending to households and corporations after the recession, firms which are too small to issue bonds are increasingly seeking to borrow from other sources such as insurers, private equity firms and hedgefunds.

Ireland has traditionally prevented hedgefunds domiciled here from lending because regulators viewed it as too risky. But with access to credit a growing problem in Europe, the Central Bank has drawn up regulations that will allow specialised loan funds it authorises to extend loans internationally. The bank issued a consultation paper on the rules yesterday and expects them to be in place by December.