When we first began distributing middle market loans (in the waning days of the Reagan Administration), the concept was novel. Back then money-center banks underwrote and syndicated mainly large corporate loans to other relationship banks. Smaller deals were mostly self-arranged, club affairs among regional banks and finance companies. Ironically the world of middle market loan…
While most Americans were in the midst of Thanksgiving preparations last week, Amazon founder Jeff Bezos was making space history. In the first successful test flight of a rocket with all reusable parts, the New Shepard booster landed four feet from where it had taken off on the plains of West Texas. Next step: human…
Valentine’s Day is still months away, but for early planners we pass along the following: The world’s second largest diamond was discovered in a mine in Botswana last week. Weighing in at 1,111 carats, the giant gem is the size of a tennis ball. One expert reported it had “the potential to be one very…
Our thoughts are with our friends in Paris this week, as events prove again our world can be a troubling and unpredictable place. We mark the fourth quarter’s midway point with a brief review of what we are seeing from our private equity clients and key middle market lender relationships. Let’s start with deal volume….
“Investors Turn Sour on Risky Deal Debt. So read a front page WSJ headline this past Monday. The thesis of the article was that slowing investor appetite was hurting “the corporate buyout boom.” Three transactions were cited as evidence of this trend – one in the pharmaceutical sector, a specialty chemicals company, and a barge…
This week we wrap up our unitranche series by asking the $64,000 question that always surfaces in discussions about the future of the unitranche: How will it fare in bankruptcy? With providers that do not bifurcate the unitranche between first-out and second-out lenders, there are no intercreditor issues to consider. But for those that do,…
There are two kinds of unitranche providers. Both provide the entire financing to the borrower at a given spread in one debt tranche. But one type bifurcates the tranche into first-out and last-out term loans to different lenders. The other doesn’t. As we’ve discussed in previous instalments of our unitranche series, one-stop structures are becoming…
So far in our unitranche series we’ve examined the structural variations of this increasingly popular financing tool for leveraged lenders and sponsors. This week we look behind the curtain at the dynamics between lenders in the unitranche itself. For some unitranche options, one debt provider alone mimics the leverage that would be offered by both…
A senior risk officer we know read with interest the first of our multi-part series on the unitranche product [link]. “What’s interesting is how quickly these one-stop financings have become the product of choice for borrowers,” he told us. “The unitranche is a real paradigm shift for borrowers and lenders, thanks to its ease of…
As with all great capital market innovations – price flex, CLOs, and second-lien term loans – the unitranche seems obvious in hindsight. Having one lender provide a senior secured tranche that mimics a combined senior and subordinated debt structure solves a number of borrower issues. Yet its development was hardly a foregone conclusion. A decade ago the…