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Markit Recap – 3/6/2017

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We noted last month that credit markets are still sensitive to political polls, despite doubts about their accuracy.

In particular, sovereign cds in Western Europe was responding to polls showing National Front leader Marine Le Pen surging ahead in the race to become France’s next president. Le Pen has stated that she is in favour of leaving the EU under the current framework, so it was no surprise to see France’s spreads widen when she took the lead in the polls.

But it was the behavior in the “ISDA basis” - the difference between sovereign CDS trading under 2014 and 2003 definitions - that caught our attention. Before Le Pen’s surge in popularity, the basis was stable at around 3bps. After her gains in the polls, the basis increased to 23bps in the final week of January...

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Leveraged Loan Insight & Analysis - 3/6/2017

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More middle market lenders expect to meet lending goals in 2017

Middle market lenders' outlook has changed a bit after coming off of a year where competition intensified and the majority of banks surveyed along with half of nonn-banks reported falling below lending goals. But, according to Thomson Reuters LPC's most recent survey, the share of those who expect to fall short again in 2017 is much lower. Only one third of banks and one fifth of non-banks don’t expect success, stating that continued competition and aggressive structures will hold them back...

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Private Credit vs. Public Debt (Second of a Series)

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In this series we are examining the characteristics of public debt, such as high yield bonds, compared with those of private credit instruments. Last week we covered interest rate risk and relative default rates. Now let’s turn to relative yields. As our Chart of the Week shows (reprised from last week), there’s been a steady…

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Lead Left Interview - Stephen Nesbitt

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This week we chat with Stephen Nesbitt, Chief Executive Officer of Cliffwater LLC. Cliffwater is one of the largest alternatives advisory firms, assisting clients globally in their allocations to hedge funds, private equity and real assets. The Lead Left: Steve, tell our readers a bit about Cliffwater. Steve Nesbitt: We advise pensions and endowments. Think…

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Debtwire Middle-Market – 3/6/2017

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Source: Cliffwater Direct Lending Index and BofA Merrill Lynch US High Yield Effective Yield The red line in the chart is the *Cliffwater Direct Lending Index (CDLI) current yield, which is based on the investment income of the underlying assets held by public and private BDCs.  BDCs invest in middle market companies, and the Index…

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The Pulse of Private Equity - 3/6/2017

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Demand for PE exposure to slacken eventually?

In 2016, 87.6% of private equity funds that closed in North America and Europe hit or exceeded their targets. Even compared to the heights of 2014 and 2015, that figure represents a clear high of the decade, and, moreover, the extent to which limited partners of multiple types are eager for exposure to the PE asset class. Given that 356 funds closed in 2016—a lower tally than observed in any of the three preceding years—but the average fund size soared to nearly $765 million...

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