Chart of the Week – Taking the Plunge
Investor confidence in publicly traded business development companies has eroded valuations markedly. Source: The Daily Shot
Investor confidence in publicly traded business development companies has eroded valuations markedly. Source: The Daily Shot
Leverage declined modestly, though almost two thirds of 4Q deals were 6x total leverage or higher. US Middle Market Leverage Multiples on Institutional Deals Source: Thomson Reuters LPC
CLO formation last year totaled $93 billion, off 2014’s record $124 billion, as managers wrestle with risk retention. US CLO Activity Source: S&P LCD
Loan issuance of just under $30 billion for middle market leveraged transactions was at its lowest point since 2010. Annual Middle Market Institutional Loan Volume Source: Thomson Reuters LPC
Leverage for all US corporate issuers is headed to levels where previous default cycles began. Source: The Daily Shot, Bloomberg Finance LP, Datastream, Deutsche Bank
Since August’s market volatility, more post-launch pricing changes have been investor-friendly.
With risk retention rules on the horizon, monthly new CLO issuance has slowed considerably.
Counterintuitively, recent data from an S&P study show recoveries for first-lien term loans improved only modestly with additional debt capital below them.
Halfway through the 4Q, middle market deals are showing sharp increases in both leverage and yield. Source: Thomson Reuters LPC; based on cohort of middle market deals with both leverage and yield data.
After a strong September, new deal volume eased and demand jumped, creating better technicals in the broadly syndicated market. Source: S&P Capital IQ LCD