Commentary

The Great Stay-In (Third of a Series)

“The three main U.S. stock indices closed at record highs as concerns over the coronavirus outbreak’s economic impact seemed to fade.” – Barron’s, February 12, 2020. Perhaps not the “Dewey Beats Truman” of media misreads, but this quote reflected widely shared sentiments among market participants. “Can anything stop this rally?” the columnist went on to

The Great Stay-In (Second of a Series)

This week we’ve been doing bedchecks on our lender friends in the credit markets. We caught up with one long-time practitioner, hanging out in the home office with family (as he put it) in “bathrobes and bunny slippers.” But clearly plugged in. “The capital markets went from price perfection to price combustion,” he told us.

The Great Stay-In (First of a Series)

In our January 8th 2020 commentary, “Of Bubbles and Gum”, we reviewed credit market conditions in the wake of the assassination of Iranian General Suleimani. Could this be the exogenous factor that sparks a Middle East war, and triggers a recession? Or will it fade quickly like so many other candidates? We concluded with the

Top Ten Myths About Private Credit (Last of a Series)

Myth #9: “Without a public benchmark, private credit returns aren’t dependable” Private credit assets are illiquid, and don’t trade. That distinguishes them positively from larger, liquid, public, yet more volatile, assets correlated with market moves. Middle market loan yields are therefore more stable through business cycles. Also, being illiquid, private credit demands, and achieves, a

Top Ten Myths About Private Credit (Sixth of a Series)

We spent our winter break last week at an Arizona dude ranch. In the horse barn we spotted a sign: “There will be a $5 charge for whining.” Heading into the home stretch of our special series on private credit myths, we like the cost for complaining. For faithful readers of The Lead Left, however,

Top Ten Myths About Private Credit (Fifth of a Series)

Here are the next two fables in our continuing special series on myths of private credit: Myth #5: “No one uses mezzanine debt anymore.” As we detailed over four years ago (link), private sub debt regularly gets kicked around at conferences for being “dead.” This has particularly been the case since the advent of the

Top Ten Myths About Private Credit (Fourth of a Series)

This week in our continuing special series on the private credit myths, we come to: Myth #3: “We’re late in the cycle, so loans now are risky.” Let’s first take the issuer side of the equation. One of the virtues of private credit is being available when public markets are shut or expensive. Invariably those

Top Ten Myths About Private Credit (Third of a Series)

We continue our special series this week with : Myth #2: “Private credit is the next market bubble.” The same notion that private credit is crowded drives the view that strong investor demand will lead to a burst market bubble. It’s a myth that’s applied regularly to leverage loans. The universe of broadly syndicated loans

Top Ten Myths About Private Credit (Second of a Series)

Responding to last week’s discussion of the relationship between age and happiness [link], several readers asked what country has the happiest residents? According to the World Happiness Report [link], Finland topped the list of 156 countries. The US was 19th, and South Sudan as the least cheerful place to live. Finland is perhaps a surprising

Top Ten Myths About Private Credit (First of a Series)

A Dartmouth College professor has found that middle age is even more depressing than we thought. The good news? Things start looking up pretty quickly after that. In a recently published study, David Blanchflower found unhappiness is a U-shaped curve, bottoming out when people are 47.2 years old. These results were consistent with residents in over