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PDF | Research | Week of June 12, 2023

Quote of the Week

“They’re between a rock and a hard place. It’s a very, very tough situation.”

– Raghuram Rajan, former governor, Federal Reserve Bank of India.

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Letter from Switzerland

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A Loan for All Seasons (First of a Series)

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When we began our career in the middle market four decades ago, we could not have anticipated its transformation to private debt, the hottest asset class in capital markets.

Back then being a lowly vice-president dedicated to smaller, non-public, non-rated, non-traded loans on the global syndicated finance desk at the great JP Morgan (then Chase Securities) was like being a short-order cook on the QE2.

We have been privileged to see those "little loans" transformed into a $1.3 trillion private debt universe rivaling both broadly syndicated loans and high-yield bonds in size. It is estimated that market will double to $2.7 trillion by 2027.

The vast majority of leveraged buyouts are now being underwritten and held by direct loan managers, with banks struggling to stay relevant...

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2023 Market Sizing & Impact Study

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Learn why secured finance is the Industry you should be following. (View report summary)

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Chart of the Week

Downside Protection

Its resistance to investor demands for liquidity protects private debt from selloffs.

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Source: Bloomberg L.P., 31 Mar 2007 – 30 Sep 2013 / Nuveen

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Stat of the Week

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Loan Stats at a Glance 

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Contact: Marina Lukatsky / S&P Global Market Intelligence

PDI Picks

In private debt, size matters

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Our recent review of the asset class’s progress over the last ten years noted how the average size of funds keeps on growing...

Leveraged Loan Insight & Analysis

Total leverage drops on 2023 US LBO deals

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So far this year, US LBO activity has been very slow. Year-to-date syndicated LBO loan volume of around US$18bn is running 70% lower year-over-year. Meanwhile, total debt to Ebitda levels on large corporate LBO deals...

Contact: Dave Puchowski/ Refinitiv LPC

The Pulse of Private Equity

Strong fundraising among secondaries

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Secondaries fundraising is off to a strong start in 2023, according to PitchBook’s Q1 2023 Global Private Market Fundraising Report. With $30.7 billion raised through Q1, secondaries fundraising is already...

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Contact: Alex Lykken / PitchBook

Middle Market & Private Credit

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Defaults in Fitch’s Private MM

Portfolio Tick Higher

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Following a sharp increase in 2020 and 2021 due to the pandemic, defaults were largely subdued in 2022 in Fitch’s private middle market portfolio, though have since accelerated, according to a Fitch Ratings report.

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Contact: Brad Hamner / FitchRatings

Covenant Trends 

Percentage of Loans with MFN Carveouts

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Contact: Steven Miller / Covenant Review

High-Yield Bond Statistics

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Weekly fund flows source: Lipper
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DL Deals: News & Analysis

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Year-to-Date Default Volume, Count

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Contact: Kelly Thompson / KBRA DLD

Private Debt Intelligence

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Direct lending dominates

private debt funds in market

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Despite a tough financial environment, private debt continues to attract capital. This comes as no surprise given that over 80% of investors expect to commit more or the same amount of capital to private debt...

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Contact: Jayda Etienne / Preqin

Debtwire Middle-Market

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Source: VanEck BDC Income ETF and BofA Merrill Lynch US High Yield Effective Yield

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Contact: Suneet Chandvani / Debtwire 

Middle Market Deal Terms at a Glance

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Contact: Stefan Shaffer / SPP Capital Partners

Select Deals in the Market

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This publication is a service to our clients and friends. It is designed only to give general information on the market developments actually covered. It is not intended to be a comprehensive summary of recent developments or to suggest parameters for any prospective financing opportunity.