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A recent report from KBRA’s research team (“Private Credit: 2024 Maturity Wall is a Myth”) outlined three conditions that need to exist for looming maturities “to present a challenge to the industry.”
First, there have to be a “significant” number of maturities coming up. Second, if lenders have to take losses as a result of their inability to successfully roll these loans, their losses have to “deplete substantial equity cushions” as a result. And finally, if borrowers’ owners “hand over the keys,” lenders must lack sufficient “infrastructure to extract value” from those companies.
From data comprising over 1,800 portfolio companies and $750 billion of private debt, KBRA estimates only 10-15% of their total loans come due in 2024 and 2025. The firm also analyzed the portfolios in the 27 BDCs it rates. Only 14% of those loans mature in the next two years. Nor is this information limited to private portfolio data. KBRA looked at the same information on all BDCs and came up with about the same figure – 16%...
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