As the leveraged loan market woke up this past January, as confidence in the economy and rate expectations grew, so the CLO market has rebounded. Not just in the US, as we detailed last week, but in Europe as well. Our friends at Creditflux highlighted this phenomenon, quoting one leading manager as saying: “Given the…
The first half of 2024 kept us busy tracking volume in the newly energized BSL market. Remarkable, but not unexpected, was its ability with fresh capital to refinance higher-cost existing deals away from the direct lenders. Left unexplained more fully was the driver of this activity. This special series explores how collateralized loan obligations (CLOs)…
“Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” In Through the Looking Glass, the Red Queen’s response to Alice’s frustration in running hard yet not getting anywhere mirrors…
The 60/40 allocation model for investing has taken some hits since the Fed began raising rates over two years ago. 2022 saw a sea of red ink for liquid strategies – both the “60” and the “40” – with improved returns last year and so far in 2024. Sophisticated institutional investors long ago adopted the…
This week we attended the 40th annual conference of the Florida Public Pension Trustees Association in Orlando. Attendees included municipal pension board members, plan sponsors and administrators. In Monday’s keynote presentation we highlighted various macroeconomic factors investors face today. While researching for our talk, we came across this interesting fact (tip of the hat to…
Back in October 2020 we introduced the concept of how supply and demand imbalances in private markets affects credit quality and performance. Too much capital chasing too few deals leads to overly aggressive terms – great for issuers, but for investors not so much. In the immediate aftermath of Covid, conditions were quite different than…
In this series we’ve reviewed market conditions for issuers as we wrap up 2Q and head into the second half of the year. Let’s conclude by looking at how investors view this environment and what questions and conclusions are arising. As we’ve highlighted, there are headwinds and tailwinds in deal flow. Demand from managers who…
Our keynote opening remarks at the 3rd Annual Sahar Private Credit Conference last week highlighted themes this special series has been developing. In particular, we delineated the distinction between demand in liquid credit, as driven by CLO capacity, and that of private credit, determined by availability of dry powder from direct lenders. On the supply…
How challenging has it been to predict the next recession? An inverted Treasury yield curve, a reliable forecaster of the past eight consecutive downturns, has been signaling recession for almost two years. So far, the economy has failed to cooperate. While growth is slowing, and inflation along with it, expectations are broad of a solid…
A friend of long-standing and keen observer of capital markets for almost a half-century tells us: “When a rising Dow hits 10,000 increments, investors feel good, even though optimism may not be justified.” And so we find ourselves mid-second quarter of 2024 with the Dow having reached 40,000, a destination that was Shangri-La not long ago….