“The majority of GPs have observed some level of interest from their investors for continuation funds.” – Private Equity International Private Fund Leaders Survey 2023. Besides the above survey, an article last month in Secondaries Investor cited Jefferies data showing 80% of LPs sought liquidity by selling into continuation vehicles. This is an extraordinary shift…
”The bond market is the most important market in the world. It is the backbone of all other markets.” – Ray Dalio, founder, Bridgewater. A recent Financial Time piece on bonds [link] reminded us of their long, proud history as well as their critical importance to the proper functioning of today’s global markets. The article…
Our last Market Now series came in March 2022 [link] after Covid had peaked and begun to fade, when Russia invaded Ukraine. This week we think another pause to review conditions is appropriate given a number of dynamics at play. First, the Fed has paused in its rate hikes as their gravity seems to have…
In early 2020, just before Covid came crashing down on our heads, we were in the middle of a Lead Left series called “Ten Top Myths About Private Credit”. Myth #5, published on February 20, was “No one uses mezzanine debt anymore.” We felt compelled, after a decade of increasingly aggressive senior and unitranche financings,…
This space has covered at length the investor-friendly changes in senior debt terms since the Fed began its rate hiking regime in March 2022. We recently spent time speaking with junior capital providers about the state of mezz terms today. “Junior capital spreads have widened out 50 to 100 bps from the end of last…
We continue our discussion this week on why private mezzanine is going from strength to strength amid current economic and market conditions. “We did zero mezzanine deals last year,” one junior capital provider told us. “This year we’ve already done half-a-dozen. We’re getting calls from sponsors that don’t typically use mezz. Deal flow is up…
It’s been a while since we felt the need to reiterate the case for junior capital. Back in December 2015 the senior debt market was in full swing recovery from the Great Recession. Interest rates were at rock-bottom lows, and senior spreads were near their post-GFC tights. Unitranche financings were growing in popularity and size…
Both veterans and newcomers to the asset class are familiar with the basics of private debt benefits. Thanks to its premium yield over liquid credit and consistent returns across economic, rate, and market cycles, investors have moved briskly into non-traded credit since the GFC. Still, as we’ve seen and heard on several continents and at…
“Leveraged loan default rate rises to 14-month high in May” “US loan default rate hits 3-year high“ “Defaults in private credit averaged 5.9% in 1Q, law firm says” Everywhere you look these days industry rags are filled with talk about looming loan defaults. For anyone who’s been a practitioner or observer of the debt capital…
A frequent question from investors and others is, “When is a good time to invest in private credit?” What they mean is, “Is now a good time to invest in private credit?” Readers of this column know one of our consistent themes is private credit is not a timing thing. On a panel at the…