Pure middle market LBO activity slumped during the 1Q 2016, while add-ons were a greater share of M&A loan volume. Quarterly Middle Market LBO and Add-on Loan Volume Source: Thomson Reuters LPC 2Q MM Investor Outlook Survey
Middle market loan activity with sponsors during the first quarter has slowed to a six-year low. Quarterly Sponsored Middle Market Loan Volume Source: Thomson Reuters LPC 2Q MM Investor Outlook Survey
Distressed debt and special situations funds show somewhat higher returns than direct lending funds, but carry significantly higher credit risk. Risk/Return by Strategy (Vintage 2003-2013 Funds) Source: Preqin Private Debt Online; sphere size represents market capitalization
European debt funds have $28.8 billion in dry powder dedicated to direct lending; private equity has almost five times that to put to work. Source: Preqin; European Dry Powder – Private Equity & Direct Lending (USD bn)
Fundraising for sixteen direct lending funds last year totaled just shy of $19 billion, nearly doubling the average 2014 fund size to $1.34 billion. Europe Focused Direct Lending Fundraising by Year Source: Preqin
Last summer’s market volatility in the US caused loan prices to plummet, attracting attention from European loan buyers. Source: S&P Capital IQ
By 2002 the share of US leveraged loans by institutional investors had surpassed 60%; it took Europe twelve more years to reach the same point. Institutional Investors’ Share of the Primary Market Source: S&P Capital IQ; 2009 date not meaningful
While their share of European leveraged loans has steadily dropped to 31%, banks are still about where they were pre-crisis. Source: S&P Capital IQ; Primary Market by Broad Investor Type, 2009 date not meaningful
The volume of institutional leveraged loans in the US is over six times as large as that of Europe on average over the past fifteen years. Source: S&P Capital IQ; Annual institutional loan volume in US dollars
The pipeline for institutional middle market loans is off to a slower start compared to last year, as sellers take a “wait-and-see” attitude on deal appetite. Source: Thomson Reuters LPC