In astronomical terms, it was a close call. Last Wednesday an asteroid almost a mile long passed within 1.1 million miles from Earth. The object, known as JO25 and nicknamed “The Rock,” was visible in small telescopes. “We’re safe,” remarked NASA plantetary defense officer Lindley Johson. ”From this one.” Keeping a sharp eye out for…
Last week’s column attracted the attention of one of our most loyal readers, and an astute observer of the credit scene. To go along with capex and cyclicality as prime corporate risks, he told us, “I would like to put in a plug for ‘Where’s the cash?’” He continued, “Maybe in middle market companies it’s not…
It’s hard to believe, but this July marks the ten-year anniversary of the collapse of Bear Stearns’ two sub-prime hedge funds, the first of a succession of events that eventually culminated in the worst economic downturn in the US since the Great Depression. While the recovery since has been anything but robust, the more the…
Institutional investors are combing through the private credit market searching both for higher returns and experienced managers to deliver those returns. The key to understanding why some firms are targeting higher yield investments is to also appreciate the kind of credit risks those managers are taking to achieve those yields. In this special series, we’ll…
At the start of 2017 spring training, the NY Yankees had a undrafted prospect on their roster named Ruth. Not the Babe, of course, though the coincidence has been noted. “It’s kind of cool to have the same last name,” said Eric Ruth, a 26-year-old pitcher. Interestingly other than the Bambino there have been no…
For high-yield bond investors, March has been the cruelest month. First oil prices – often linked to bond prices – took a dive, from $54/bbl to $48 in just three weeks. Then last week the Fed hiked interest rates, and signaled they weren’t done by a long shot. That combination of happenings compelled junk buyers…
The fundamental thesis governing credit risk for bond holders relative to loan holders is that the latter is advantaged by the seniority and secured position in the issuer’s capital stack. As our Chart of the Week shows, these two elements work together to give loan investors the best chance for the highest recovery in case…
In this series we are examining the characteristics of public debt, such as high yield bonds, compared with those of private credit instruments. Last week we covered interest rate risk and relative default rates. Now let’s turn to relative yields. As our Chart of the Week shows (reprised from last week), there’s been a steady…
One of the more discussed charts we’ve run in this newsletter recently compared direct lending yields with that of high-yield bonds. Seems as if many were surprised at the significant spread differential between the two asset classes. For those who missed this chart, we reprise it below as our Chart of the Week. It made…
In this special series on the outlook for leveraged lending for the year, we’ve looked at what our readers can expect for deal terms, including pricing, leverage, structures, and covenants. We’ve also closely examined the factors that will affect the supply and demand for transactions. Last week, we covered the future of credit quality. Finally,…