2018 saw another increase in sponsored M&A volume in the middle market; up 12% from 2017.
Secondary prices for LPC’s top liquid loans rose almost 2%, as public markets have regained confidence over the past week.
During the worst of the credit crisis the lower volatility of middle market loans is evident, compared to bonds or liquid loans.
At the depth of the credit crisis, middle market loan prices proved less volatile than their broadly syndicated counterparts.
Secondary loan bid levels have softened concurrent with overall public market volatility.
Leverage for club middle market unitranche deals has stayed a constant 5x.
Since 2015 investors in the Leveraged Loan Index are being compensated less-well for risk.
While data for cov-lite bankruptcies are limited, post-crisis recoveries were below pre-crisis levels.
Data suggests that loan recoveries are both facility and structure dependant.
Higher leverage and weaker structures for leveraged loans is expected to result in worse than historic recoveries.