Last week we looked at sponsored middle market loan volume to come up with an idea of how large the midcap universe is. Before run-offs and refinancings, we came up with a figure of $410 billion. Now we turn our attention to the sponsored middle market refinancing cliff. As our Chart of the Week highlights, about $238…
To get a better handle on the total universe of middle market loans, let’s define what we mean by the middle market. Should we include, for example, both non-sponsored as well as sponsored loan volume? Thomson Reuters LPC estimates there’s been an average of $100 billion in annual non-sponsored activity since 2000. But these financings…
As great mysteries of life go, it’s not quite in the same category as what’s the universe made of, how does gravity work, or what ever happened to tan M&Ms. But for those who make it our career home, one of the most often-asked and vexing questions over the years has been, how big is…
If sheer volume means anything, total syndicated loan activity in the US for the first half of the year was singular. According to Thomson Reuters LPC, more than $1.2 trillion of paper – both investment and non-investment grade – was distributed through June 30. That was a bigger number than any other half-year on record. Digging…
It was probably mission impossible, but we gamely tried this week to complete a personal Top Ten list. This one is called “Top Ten Best Things About Rupturing Your Quadriceps Tendon in Church on Father’s Day.” #10 came quickly. “The minister was right there to deliver last rites.” #9 was relatively easy: “A brand-new walker…
“Capital is destiny.” We’re not sure this pronouncement will make it into the next edition of Bartlett’s Familiar Quotations, but the notion sprung to mind as we recently addressed a top business school class. Topic? How private equity sponsors finance leveraged buyouts. To show students how debt markets work, we discussed how issuers benefit when…
“When things are good, people don’t pay attention to covenants, but when things go sour, covenants are their only line of protection.” So said one head of credit research of a large asset manager in a recent Bloomberg article. He was referring to bond covenants, but the lesson applies equally to loans. And things have…
It’s not surprising so much fuss has been made about the proliferation of cov-lite structures in the leveraged loan market. After all, what was the exception even among larger issuers has become the rule (see our Chart of the Week). Indeed this trend has been growing since 2013 when almost 60% of loan volume lacked…
At a recent debt conference we did what most of our direct lending colleagues are doing these days: complain. Speaking with one long-time practitioner, we mentioned a middle market transaction which was both cov-lite and ebitda adjustment-heavy. “Yeah, it’s ridiculous,” he said. “But it’ll get done.” Therein lies the problem. As we discussed last week, loan…
An astute Lead Left reader appreciated the first part of our special series on covenants. He alerted us to a ironic development Friday in the high-yield bond market. According to Bloomberg, bondholders of the commodities trader, Noble Group, saw values drop below 50 cents on the dollar on a negative earnings surprise. Apparently the bonds…