A Loan for All Seasons (Third of a Series)

“Leveraged loan default rate rises to 14-month high in May”

“US loan default rate hits 3-year high“

“Defaults in private credit averaged 5.9% in 1Q, law firm says”

Everywhere you look these days industry rags are filled with talk about looming loan defaults. For anyone who’s been a practitioner or observer of the debt capital markets for more than a couple years, the above headlines are familiar ones. They could have been yesterday’s news.

Well, they are yesterday’s news. These headlines are all from the archives of our content partner Pitchbook LCD, dated June 2016, March 2018, and May 2020, respectively. You can find nearly identical ones in their current headlines. The truth is that defaults are a fact of life in leveraged lending. As a manager, the question is how you deal with them.