Commentary

All Ahead Full: Private Credit Outlook 2022 (Fourth of a Series)

Back in 2015 we introduced the concept of the “cargo-pants strategy” [link]. It was our observation that direct lenders saw the opening to compete against banks for leveraged finance deals, but needed virtual balance sheets to hold larger commitments. Over time these managers raised multiple vehicles – CLOs, separate managed accounts, commingled funds, BDCs, etc….

All Ahead Full: Private Credit Outlook 2022 (Third of a Series)

At recent private credit conferences we’ve been asked how managers think about portfolio construction. The answer depends on your experience over the past twenty-two months. Covid clearly threw a wrench in investors’ business assumptions. As one private equity partner told us, “we had a base case and a down-side case, but we didn’t have a…

All Ahead Full: Private Credit Outlook 2022 (Second of a Series)

Thanksgiving week in the US capital markets is always a mixed blessing. A wonderful time for families and friends, celebration and gratitude. Yet it’s also smack in the mad year-end rush. Everyone juggling deals and holiday get-togethers – and all running on fumes. Six weeks before, incredibly, it starts all over again. What will deal…

A Market in Full (Last of a Series)

Our friends at William Blair ended their 3Q survey [link] with a summary of issues most expected to impact leveraged loans through year-end. Here’s a sampling: Supply/demand equilibrium. Which comes first, supply or demand? Retail cash inflows and CLO capacity largely drive liquid loan demand. Once issuers see there’s investor appetite, they hit the market…

A Market in Full (Fourth of a Series)

Having moderated three private credit panels in the past ten days, a recurring theme is the record level of deal volume. What’s driving this unprecedented activity? In its recently published 3Q survey [link], William Blair reported $155.3 billion of institutional loans, nearly the highest number they’ve recorded. Almost 60% – $92.4 billion – was dedicated…

A Market in Full (Third of a Series)

We report (in person!) this week from the SuperReturn Private Credit conference in Chicago, where we chaired day one, moderated an LP panel, and interviewed the keynote speaker. The event always attracts top-shelf credit investors and managers, and 2021 is no exception. Sifting through sentiments on the economy and markets from various panels, we discovered…

A Market in Full (Second of a Series)

News reached us recently of a young walrus that had wandered south from his Arctic range in search of ice floes. Landing in Ireland, Wally began boarding luxury yachts. The property damage turned the whiskered wayfarer from “visiting celebrity to public enemy number one.” It all worked out, though, when a marine biologist enticed the…

A Market in Full (First of a Series)

Of the many unanticipated consequences of Covid, one that caught our eye was the recent NYT headline: “Birds Thrived During Lockdowns.” Seems that while we were stuck at home last spring, our feathered friends were out partying. Urban areas, otherwise crowding out some species, saw hummingbirds and bald eagles return at 14 times pre-pandemic levels….

Supply Chain Blues (Last of a Series)

Last fall, the Harvard Business Review examined Covid’s impact on supply chains [link]. The pandemic, they wrote, “exposed vulnerabilities in the production strategies and supply chains of firms just about everywhere,” The study also presciently identified “the growing electronics content in modern vehicles” as a potential bottleneck. Today we are witnessing how the shortage of…