“We did not underwrite for this.”

So said the managing partner of a top-tier middle market private equity firm. In a conversation with us recently, he spoke of the challenges and uncertainties surrounding the impact to businesses of COVID-19.

“We always model downside scenarios for any investment we consider,” he said. “But the zero revenue case wasn’t one of them. This is such a dramatic shift from anything anyone has ever encountered. We’re working 24/7 to figure it out.”

How are direct lenders helping their private equity clients navigate these uncharted waters?...

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“Investing is a really easy business until you go through a correction.” – Jonathan Grabel, chief investment officer, LA County Employees Retirement Association.

Featuring Charts

Chart of the Week: Year of the Virus

April 2, 2020

A recent Refinitiv lender survey revealed expectations of a quick COVID-19 resolution is unlikely.

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Chart of the Week: Anybody’s Guess

March 26, 2020

No question future growth will be off big-time; just how bad, and for how long, is unknown.

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Chart of the Week: Price Choppier

March 19, 2020

The average bid for the most liquid leverage loans cratered as the effects of the coronavirus have taken hold.

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Chart of the Week: Pick Up VIX

March 12, 2020

The VIX index of volatility hit a post-recession high in the 40’s this week amid coronavirus concerns.

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Chart of the Week: All Relative

March 3, 2020

Senior direct loans in BDCs have maintained a steady 10% yield, better than high-yield bonds.

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Chart of the Week: Recovery Room

February 26, 2020

Middle market mezzanine activity slumped last year, but has maintained a steady pace since 2013.

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Features

Private Debt Intelligence – 3/30/2020

The Expanding Fund Manager Universe The number of participants in the private debt asset class has grown at a remarkable pace since the GFC. There are currently over 1,700 fund managers active in the industry, over twice as many as five years ago. Asia has historically accounted for a modest share of the global private

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PDI Picks – 3/30/2020

How LP views of private equity are being shaped by covid-19 Fewer but more open-minded commitments may be among LPs’ responses to the crisis, according to our new survey. The covid-19 outbreak has thrown the pieces of the puzzle in the air and, as yet, we don’t know exactly how those pieces will land. But

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Leveraged Loan Insight & Analysis – 3/23/2020

BDC share prices rally after plummeting to below 0.4x book value earlier in week BDC share prices rallied on Thursday following the coronavirus relief bill cleared by the U.S. Senate.  At the start of the week, BDCs were brought back to their darkest days of The Great Financial crisis with average BDC share price-to-book value

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The Pulse of Private Equity – 3/23/2020

Competing interests for private equity Download PitchBook’s Report here. Private equity has lots of money at the ready—the question is what they will use it for. In the months ahead, investors will be looking at an unprecedented opportunity to buy. On the other hand, they’re also in very familiar territory of keeping their current crop of

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Private Debt Intelligence – 3/23/2020

Private Debt: Rise of Covenant-Lite Loans The growth in covenant-lite issuance in the loan market has sparked heavy discussion. The growth of supply in mid-market lending has led to a loss of value, which has in turn brought about a rise in weaker covenants. As investors allocate to private debt, they find themselves increasingly unable

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Middle Market Deal Terms at a Glance

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State of the Capital Markets – Fourth Quarter 2019 Review and First Quarter 2020 Outlook

January 16, 2020

Review of Current Market Conditions/ Analysis of Capital Markets Metrics/ Review of Credit Quality/ Outlook for First Quarter 2020

Special Report: Private Debt – Search for Transparency

October 24, 2019

In June 2019 The Lead Left published a series of articles on private debt. This report consolidates those articles.

Special Report: Covenantive Easing

September 5, 2019

In May 2019 The Lead Left published a series of articles on covenant trends. This report consolidates those articles.