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….
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…
Even in the ordinary course of business, private equity sponsors pay ruthless attention to the cost structures of their portfolio companies. It is a time-tested tool in sponsors’ kits and often on the first page of their due diligence playbook. Covid has simultaneously raised the bar and challenged buyers in managing all aspects of companies’…
Before Covid the persistent view on private credit was too much capital was chasing too few deals. Transaction inflation caused compressed spreads, higher leverage and weakened terms. When Covid hit this balance shifted dramatically in favor of the investor. Deal supply dried up, lenders retreated, and terms strengthened. But within weeks central bank liquidity ended…
Over the past 18 months it’s been fascinating to watch the divergent, often contradictory economic narratives in headlines and data. While the Delta variant created a surge of infections that in some states rivaled the original virus, capital markets continued their barnstorming ways. Even including its recent pullback, the Dow is up 5% since Delta…
We’ve all been there. You try to re-order your favorite beverage, sneaker, exercise bike, or cleaning product, and it’s out of stock. The dynamics behind these supply chain issues differ depending on the situation. Some manufacturers are still playing catch-up with consumer demand in areas such as home improvement and fitness. Others are challenged by…
In a recent conversation with a good friend in private credit, a veteran of the industry for many years, he reminded us of the history of one-stop financing. “In the beginning,” he reminded us, “unitranche was a creature of broken markets. It was designed to step in when banks were backing away. Today it’s accelerating…
According to Refinitiv LPC, US unitranche volume came to almost $22 billion last quarter – the highest level they’ve tracked historically. That activity was comprised of records for both the middle and the larger corporate markets. At the same time, one-stop risk/return dynamics have moved in favor of issuers. The average debt/ebitda is now at a…
In October 2015 we published a series of articles on the unitranche, what we called “one of the most innovative, and increasingly popular, financing tools in the middle market.” Those commentaries were consolidated into a white paper: “The Unitranche – What it is, and Why it Matters.”. In that white paper we covered the history…
As we conclude our European private credit series, let’s review what we’ve learned so far: – Europe suffered a similar Covid slump (and enjoyed a similar rebound) as the US. Yet Europe also retained the country-by-country distinctions they had pre-Covid. The recovery in all capital markets was swift; deal volumes are now at record highs….