The cost of buying companies has risen for private equity sponsors as a multiple of ebitda since the credit crisis.

After peaking in 2017 at close to 50%, equity share of capital in the middle market has declined to less than 35%.

Mergers, consolidations, and regulation all share responsibility for the flight of leveraged loans to the non-bank sector.

The long-term durability of leveraged loans was demonstrated out of the last recession, as values climbed back to par.

Over time collateralized loan obligations have proven to be resilient through cycles and regulatory hurdles.

After a good run leading up to last year’s market volatility, virtually no names in the LCD LSTA Leveraged Loan Index are trading at or above par.

The premium between large cap and the middle market has shrunk to 50 bps, the tightest in a decade.

Direct lending has attracted over $275 billion in capital since 2014 across various strategies.

Amid significant price volatility that occupied liquid markets, middle market loan trading levels were relatively stable.

It’s early days, but the middle market pipeline is off to a slightly better start than 2018.