As our Quote of the Week so concisely frames it, the world is changing from one where risk-taking was rewarded, to one where it is punished if not appropriately managed. The question for private credit investors is, can you be rewarded while managing risk?

In a nutshell, the Fed’s withdrawal of systemic capital and relentless rate hikes plus the flight of cash from liquid credit has opened a window of opportunity. Yet that same potential for higher yields will drive up default rates based on tighter ability of issuers to meet interest payments. Squeezing capital supply and spending could then trigger an economic slump.

Ironically the current credit vintage – including 2023 – which sports lower leverage, tighter structures, and wider pricing, is significantly more investor-friendly than anything over the last decade...

Quote of the Week

“There is a regime change underway. In the previous regime, risk-taking was rewarded.” – Micky Jagirdar, co-portfolio manager, Ariel Investments.

Featuring Charts

Chart of the Week: Exit Ramp

October 5, 2022

Middle market private equity exits have slowed dramatically in the current environment.

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Chart of the Week: Hurricane Fed

September 28, 2022

The Fed’s battle against inflation has roiled all equity and fixed income markets.

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Chart of the Week: Powder Puffs

September 21, 2022

There’s an almost $400 billion gap between private equity and credit dry powder.

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Chart of the Week: Slowmentum

September 15, 2022

High-yield issuance down to a crawl amid Fed’s rate uplift and recession fears.

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Chart of the Week: Collectors’ Item

September 7, 2022

Covid, likely helped by volatility and inflation, has been a boost to trading card returns.

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Chart of the Week: Headed Up?

August 17, 2022

The 30-Year US Treasury index has been on a down slide for over three decades…so far.

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Features

Private Debt Intelligence – 10/3/2022

NA private debt deal activity struggles to catch up with 2021 highs Private debt deal activity in North America has slowed in the second half of 2022 so far, with the number of deals dropping to just over 100 in Q3 this year. Since the recent high of $78.8bn in Q2 2021, aggregate deal value…

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PDI Picks – 10/3/2022

The UK: room for optimism but concern growing While dealflow remains strong, lenders are cautious as we head towards the end of the year. Figures from Deloitte’s Alternative Lender Deal Tracker show the UK debt market is still the most active private lending space in Europe, accounting for 111 out of the 395 deals on…

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Leveraged Loan Insight & Analysis – 9/26/2022

Poll: Direct lenders overwhelmingly say they stayed busy in 3Q22 The direct lending market continues to be a popular go-to option at a time when the syndicated loan market has seen lower volumes due to heightened levels of volatility. Refinitiv LPC recently polled US middle market lenders, asking them: were you able to lend as…

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The Pulse of Private Equity – 9/26/2022

Direct lending keeps replenishing Download PitchBook’s Report here. PitchBook’s latest Private Debt Report is now available. Direct lending is “the standout strategy” among private lenders, now accounting for more than a third of all capital raised in the private debt market. The ratio was actually higher last year, 46.5%. Direct lending is joined at the hip…

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Private Debt Intelligence – 9/26/2022

More APAC investors commit to PD, highest increase in ASEAN Tighter bank lending conditions are leading to increased demand for capital from companies, allowing APAC’s nascent private debt market to expand. APAC-based private debt AUM stands at $78bn as of December 2021 and has grown at an average rate of 29% over the past five…

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