For a sense of overall credit conditions, we tuned last week into the European Leveraged Finance Mid-Year Update hosted by Fitch. The discussion – covering the economy, ratings, covenants, and structures – was virtually indistinguishable from recent US market conferences. Apart from these panelists’ distinguished accents. For example, activity for leveraged loans in Europe has…
Our fondness for colorful metaphors led us, in our 2016 series, to compare European direct lending to Burger King’s new hot dog venture. The burger giant’s thesis was to apply “sixty years of flaming-grilling expertise,“ but also recognized they’d have to “chop the onions a little differently.” Apparently, hamburger prowess didn’t translate to frankfurters. The…
Say what you will about last year’s Covid-induced downturn in the US beginning in March. But it paled in comparison to the UK’s economic cratering. Not since the Great Frost of 1709 had that proud nation suffered such a dramatic slump. Europe, in various degrees, followed suit. But then, like the US, Europe and the…
“We are in a new era with the Fed. They have a new reaction function…[and] this is their first trip around the track with it.” – Anne Mathias, senior strategist, Vanguard. Inflation, or the threat of it, presents challenges for both regulators and investors. Higher inflation generally impacts fixed income assets negatively as increased rates…
As part of our continuing inflation series, we caught up with Joseph Lavorgna, Natixis’ chief US economist, who just returned from a stint as chief economist of the National Economic Council. “People forget what real inflation is,” he told us. “I was seven years old during the oil embargo in the 1970’s when there were…
We continue our special series on inflation speaking with Nuveen’s chief investment strategist, Brian Nick. Brian, there’s a lot of attention being paid by markets to inflation risk. Is this warranted? “Prices of certain goods and services in the U.S. are rising for a variety of reasons, all of which we believe to be transitory….
“Inflation (noun): 2. A continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.” “Transitory (adjective): 1. Of brief duration: temporary. 2. Tending to pass away: not persistent.” Thanks to Merriam-Webster for these clarifying entries, which together define one perspective…
“Thank you for this series. I’m curious how the benchmark accounts for where the loan is in the cap structure? For example, recovery rates for unitranche, 1st lien and second lien are different. Any portfolio would have to match the composition to effectively compare against the benchmark. Otherwise, you would need different benchmarks for each.”…
Private debt, compared to private equity and real estate, is a relatively recent entrant to the alternative asset class. But that market has grown faster than others over the past decade. In 2007, just before the Great Recession, private debt AUM measured less than $200 billion. Today the universe of illiquid credit is $900 billion…
Back in January we featured content from Lincoln International’s Valuations and Opinion team [link]. Topics included Covid’s impact on private credit terms, structures and pricing. Shortly thereafter the team reached out to road test a loan index created from Lincoln’s quarterly valuations of 2,400 private companies. Metrics included total return, price, spread, and yield to…