Elements of Corporate Risk (Fourth of a Series)

In astronomical terms, it was a close call. Last Wednesday an asteroid almost a mile long passed within 1.1 million miles from Earth. The object, known as JO25 and nicknamed “The Rock,” was visible in small telescopes. “We’re safe,” remarked NASA plantetary defense officer Lindley Johson. ”From this one.”

Keeping a sharp eye out for close encounters of the credit kind are always on the mind of portfolio defense officers, otherwise known as credit risk officers. Leverage loans provide greater yields to investors than lending to investment grade corporate borrowers, but also entail higher risk. More leverage means less cushion in event of operational or systemic problems impacting revenues and cash flows.

Technology risk – While advances in technology have always created winners and losers, the pace of disruptive innovation has accelerated dramatically in the past decade. In particular...



“The biggest mystery of the year has been the disconnect between the chaos in Washington and the calmness in markets.”
Adam Sender, founder, Sender Co. and Partners.

Chart of the Week: Vertical Drop

Leverage for healthcare and tech issuers was off 1Q for club deals, while rising for service firms and manufacturers.

Lead Left Spotlight

Mitch Drucker

Managing Director

Garrison Investment Group

"We believe that to succeed in this market, a team needs to be diversified, cycle-tested and at the right place in the capital structure."

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Stephen Boyko



"The increase in leverage is likely driven by high purchase price multiples and relatively stable equity contributions by private equity sponsors."

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Kevin Griffin

CEO and Chief Investment Officer

MGG Investment Group

"Entrepreneurs focus on different things and different structures than private equity owners."

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Stephen Nesbitt

Chief Executive Officer


"Direct lending returns are 10%, versus what could be zero for IG bonds."

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Stephanie Link

Managing Director & Equity Portfolio Manager

TIAA Global Asset Management

"Until interest rates get over 5% - it’s premature to think for bond holders to run for the hills."

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Eric Green & Mark O’Keeffe

Global Co-Head & Portfolio Manager - Middle Market Capital


"Unlike in the U.S., banks are a factor in Europe."

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Markit Recap – 4/24/2017

It seemed like Europe breathed a collective sigh of relief after the prospect of a far-right presidency in France receded. The centrist Emmanuel Macron secured victory in the first-round of the French presidential election on April 23, beating National Front leader Marine le Pen into second place. The two will now face each other in

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Leveraged Loan Insight & Analysis – 4/24/2017

Share institutional term loans yielding less than 5% drops to 53% in 2Q17 from 68% in 1Q17 Primary yields, while still at low levels, have inched up so far in April. The average primary yield assuming a three year term to repayment on first-lien institutional tranches is 5.03% so far in April, up from 4.61%

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The Pulse of Private Equity – 4/24/2017

PE moves further into IT, software View PitchBook’s 1Q 2017 US PE Breakdown Report Here Thoma Bravo, Vista Equity Partners and Silver Lake used to be the paramount examples of the few notable PE firms making primarily tech and/or software plays. However, overall investment within the IT industry has grown significantly over the past several

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Private Debt Intelligence – 4/24/2017

Private Debt Dry Powder by Geographic Focus While fundraising has been strong in recent years, private debt managers are managing to deploy capital at a similar rate to securing commitments from investors. As such, the level of dry powder has remained relatively constant in recent years, but has risen notably since the end of 2012....

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Middle Market Deal Terms at a Glance

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Apr 2017 SPP

State of the Capital Markets – First Quarter 2017 Review and Second Quarter 2017 Outlook

Review of Current Market Conditions/ Analysis of Capital Markets Metrics Including Covenants, Pricing, and Leverage/ Review of Credit Quality/ Outlook for First Quarter 2017

State of the Capital Markets – Fourth Quarter 2016 Review and First Quarter 2017 Outlook

Review of Current Market Conditions/ Analysis of Capital Markets Metrics Including Covenants, Pricing, and Leverage/ Review of Credit Quality/ Outlook for First Quarter 2017

Special Report: Why Sponsors Matter

Beginning in September 2016 The Lead Left published a series of articles on sponsors. This report consolidates those articles.