We spent our winter break last week at an Arizona dude ranch. In the horse barn we spotted a sign: “There will be a $5 charge for whining.”

It’s worth mentioning, as we head into the home stretch of our special series on private credit myths, since capital markets observers always seem to need something to complain about. For faithful readers of The Lead Left, however, there’s no charge.

Myth #7: “Private credit recoveries will be worse than 2009”

The notion that leveraged loan performance will be worse during the next recession rests on the current prevalence of record high borrower leverage and cov-lite structures...

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“The market mythology has become the stock market can’t go down when the Fed is adding reserves.” – Ian Shepherdson, chief economist, Pantheon Macroeconomics.

Featuring Charts

Chart of the Week: Mezz Marches On

February 19, 2020

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

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Chart of the Week: Home in the Range

February 12, 2020

Over the decade, middle market and liquid loan yields have maintained their relative values within a band.

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Chart of the Week: Par for the Course

February 5, 2020

Overall loan valuations have a natural ceiling, with secondary prices more susceptible to downward moves from par.

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Chart of the Week: Short Stack

January 28, 2020

Of the $6.7 trillion of private capital assets under management in the US, only $800 billion is private credit.

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Chart of the Week: Share of the Pie

January 22, 2020

Middle market syndicated loans are increasingly led by direct lenders, taking share from banks.

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Chart of the Week: Back to Earth

January 15, 2020

2019 leveraged loan volume was off 35%; the second straight decline since the 2017 peak.

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Features

Private Debt Intelligence – 2/24/2020

Outlook for Private Debt in 2020 Private debt investors are generally satisfied with the performance of their portfolios. Eighty-nine percent of those Preqin surveyed in November 2019 said that private debt performance had either met or exceeded their expectations, the highest figure among all alternative asset classes....

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PDI Picks – 2/24/2020

Distress is back in fashion Amid a subdued year for private debt fundraising in 2019, distressed debt proved to be a magnet for investors. Last year saw the lowest level of private debt fundraising since 2014, indicating that the asset class may be losing some of its sheen – or that investors are taking a

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Leveraged Loan Insight & Analysis – 2/17/2020

Combined AUM approach US$800bn for US CLOs and retail loan funds US CLO assets under management (AUM) have climbed to US$677.24bn in January after a 15% increase last year to US$673bn. Roughly 60% of the assets are in CLOs with a 2017 or later vintage with 8% of assets in vintages from 2014 to 2016.

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DL Deals: News & Analysis – 2/17/2020

DL Deals: ACProducts Deep Dive KKR Capital Markets used hard call premiums starting at 103 on ACProducts, a B/B2 credit that had more of a hybrid distribution strategy this month, to protect the attractive L+650 spread from being taken out quickly via repricing. The move is reminiscent of Qlik Technologies in 2016, however today’s repricing

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The Pulse of Private Equity – 2/17/2020

The humbled FoF market Download PitchBook’s Report here. We’ve wondered before if funds of funds are becoming obsolete. Perhaps a hyperbolic word choice but probably only a couple standard deviations from the truth. FoF fundraising has nosedived over the past decade, as has its industry clout. Our most recent overhang numbers, dissected in PitchBook’s just-released Private

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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.