Private Debt: Search for Transparency (Fourth of a Series)

Last week in our special series on visibility in direct lending, we touched on the element of risk/reward. This week we examine relative credit losses and liquidity of the asset class.

The issue of private credit losses cuts to the heart of transparency. Since middle market borrowers are generally smaller, private, and unrated, and their financings illiquid, it’s a challenge getting accurate default and recovery data.

In Private Debt: Opportunities in Corporate Direct Lending, Steve Nesbitt uses the Cliffwater Direct Lending Index to help shed light on this question...

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Quote of the Week

“There’s always a reach for yield when rates go down.” – Kristina Hooper, chief global market strategist, Invesco.

What’s Your Favorite Quote of the Week?

Featuring Charts

Chart of the Week: Life Expectancy

July 16, 2019

Thanks to consistent repayments since the credit crisis, direct loans have an effective life of less than three years.

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Chart of the Week: Premium Outlets

July 9, 2019

Cliffwater’s analysis of risk premiums across asset classes shows a broad range of returns above Treasurys.

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Chart of the Week: Counting Your Losses

July 5, 2019

Losses incurred by direct lenders tend to follow a pattern based on the experience of each manager. Source: Cliffwater LLC

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Chart of the Week: Senior Housing

June 27, 2019

The recent pick-up of senior lending coincides with new private credit providers entering the market.

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Chart of the Week: Face Time

June 20, 2019

The share of financings with a covenant requiring a management meeting rose last year.

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Chart of the Week: Freer and Clearer

June 13, 2019

The share of loans with free and clear grower components climbed to a record high in the three months through May 2019.

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Features

Private Debt Intelligence – 7/15/2019

Private Debt Fundraising in Different Regions over H1 2019 Private debt fundraising started 2019 slowly, and in Q2 it has not picked up. Looking regionally, it appears that while prospects are good in North America, in Europe and Asia fundraising momentum has fallen to the mid-point of the year....

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The Pulse of Private Equity – 7/15/2019

12x the rest of the year? Download PitchBook’s Report here. Two quarters into 2019 and buyout multiples remain above 12x on a median basis, according to PitchBook’s recently released PE Breakdown Report. Quarterly readings from 2015 to early 2016 were in the 9.5x to 10.5x range, with multiples gradually building over time. Though high, investors have

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PDI Picks – 7/15/2019

Distressed managers find favour with investors in H1 2019 The biggest challenge for such shops will be where to find chances to deploy capital should no extended period of topsy-turvy markets ensue. Distressed debt fundraising has come back in a big way in the first half of the year, according to Private Debt Investor’s fundraising

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Leveraged Loan Insight & Analysis – 7/8/2019

Syndicated MM sponsored lending volume reached $13.6bn in 2Q19 Syndicated middle market sponsored lending volume improved somewhat in the second quarter, but not nearly enough to match 2017-2018 levels. Issuance grew 10% quarter over quarter to US$13.61bn in 2Q19, but was still over 40% lower than 2Q18 levels. The lack of refinancing actvity was the

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Private Debt Intelligence – 7/8/2019

Private Debt Fundraising Slump Continues in Q2 2019 Private debt fundraising slowed in Q1 2019, with a fall in both the number of funds closed (32) and the total capital secured ($24bn). That slowdown continued in Q2, continuing the decline seen in fundraising since the most recent peak in Q2 2018. Just 29 funds reached

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Middle Market Deal Terms at a Glance

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State of the Capital Markets – Second Quarter 2019 Review and Third Quarter 2019 Outlook

July 18, 2019

Review of Current Market Conditions/ Analysis of Capital Markets Metrics/ Review of Credit Quality/ Outlook for Third Quarter 2019

Special Report: Why Valuations Matter

June 13, 2019

Beginning in April 2019 The Lead Left published a series of articles on valuations. This report consolidates those articles.

Special Report: Leveraged Loans and Systemic Risk

April 24, 2019

Beginning in February 2019 The Lead Left published a series of articles on leveraged loans and systemic risk. This report consolidates those articles.