It is a measure of the impact the GFC had on regulators, financial policy makers, and the capital markets that faith in systemic liquidity is now a foundational principle.

We saw that confidence further underlined as the economy emerged intact from the global pandemic. And supported as well by the patience shown by financial markets as central banks pursued their aggressive battle against inflation. The reward has so far been the softest of landings, a possibility dismissed by many economists not long ago.

And how about that inverted yield curve?

We invoke these predictions not to cast aside all fears, but to illustrate the challenge of underestimating how capital, like water, fills a vacuum regardless of financial circumstances. Worries about the leveraged loan maturity wall fall into this category...

We expect volatility to stay lower for a little longer and expect no bigger setback in markets – unless ‘something new’ happens.” – February 2024 report, Deutsche Bank, cross-asset strategists, as quoted in the FT.

Featuring Charts

Chart of the Week: Larger for Longer

February 20, 2024

Echoing dynamics in the loan market, corporate debt maturities have lengthened. Source: Bloomberg, Goldman Sachs Global Investment Research(Past performance is no guarantee of future results.)

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Chart of the Week: Four More Years

February 12, 2024

The bulk of private debt doesn’t start maturing until 2027, peaking in 2028. Source: KBRA DLD(Past performance is no guarantee of future results.)

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Chart of the Week: Cliff Notes

February 7, 2024

Less than 20% of institutional leveraged loans come due in the next three years. Source: PitchBook LCD, Morningstar LSTA US Leveraged Loan Index(Past performance is no guarantee of future results.)

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Chart of the Week: Primary in the Secondaries

January 30, 2024

The share of GP-led equity secondaries has peaked relative to LP-leds. Source: Jefferies(Past performance is no guarantee of future results.)

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Chart of the Week: Buy and Cellar

January 23, 2024

With higher rates creating financing and valuation challenges, M&A has plummeted. Source: PitchBook(Past performance is no guarantee of future results.)

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Chart of the Week: Stairway to Heaven

January 15, 2024

Investors benefit from – and issuers work through – higher-for-longer rates.   Source: LSEG LPC(Past performance is no guarantee of future results.)

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Features

Leveraged Loan Insight & Analysis – 2/19/2024

Daily Analytic: Share of portfolios marked below 80% varies widely across BDCs *Based on universe of BDCs that have reported 4Q23 earnings as of 2/13/24 Looking at the universe of 24 BDCs that have published their 4Q23 results as of February 20, we see that credit quality statistics have been relatively stable, with notable differences…

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Middle Market & Private Credit – 2/19/2024

Fitch’s Private Middle Market Portfolio, Rating Activity Upgrades/downgrades in Fitch’s PMM portfolio are generally skewed toward downgrades, as issuer ratings can be constrained on the upside based on limited scale. Downgrades outpaced upgrades in 2023 as pressure from higher interest rates affected the FCF and financial flexibility of issuers in lower rating categories…. Login to

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PDI Picks – 2/19/2024

Investors bullish on returns Private debt’s recent outperformance of private equity has bolstered faith in its ability to beat performance benchmarks. Another boost was given to believers in a private debt ‘golden age’ last week, with a report from Bloomberg suggesting private debt fund returns beat those for private equity for two quarters in a…

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Leveraged Loan Insight & Analysis – 2/12/2024

BDC portfolio marks edge higher in most recent quarter* *Based on universe of BDCs that have reported 4Q23 earnings as of 2/13/24 BDC earnings season is in its early stages, with the vast majority of funds still yet to file. However, taking a look at the 16 BDCs that have published their 4Q23 results as…

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Private Debt Intelligence – 2/12/2024

GPs target APAC’s emerging private debt market APAC’s nascent private debt market is witnessing significant growth, with the amount of capital targeted by direct lending funds rising to $11.7bn from 45 APAC-focused vehicles at the end of 2023, up from $7.3bn by 40 funds at the start of the year, according to Preqin data…. Login

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