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Leveraged Loan Insight & Analysis -1/23/2017

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Unitranche volume grows while deal sizes get bigger

As money continues to pour into the middle market searching for yield, the unitranche structure continues to gain traction. Unitranche volume reached US$13.3bn in 2016, up from US$8.5bn in 2015. Bigger deals were seen in 2016 as more and more lenders continued to build scale and increase their hold size. The average deal size was $198M in 3Q16 and $129M in 4Q16. But 50% of unitranches continue to be in the $0-$100M deal size area...

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The Pulse of Private Equity - 1/23/2017

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US PE company inventory still poses questions

As of the end of 2016, there were 7,168 companies backed by private equity firms in the US. That represents a 46% increase over the 4,923 recorded in 2009. Even though the majority of those businesses are on the younger side in terms of when they were invested in, there is still a significant portion that has been held for over six years. Part of that is due to slowing exit activity throughout last year, but it also raises questions about portfolio company quality...

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Private Debt Intelligence - 1/23/2017

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Mezzanine Vehicles Drive Private Debt Fundraising in 2016

2016 saw 141 private debt vehicles reach a final close raising a combined $89bn, a slight slowdown from the 156 funds that secured a record $97bn of investor capital in 2015. However, 2016 still marked another year of extremely robust fundraising with investor appetite for the asset class showing no signs of diminishing.

Direct lending funds accounted for the highest number of vehicles closed through the year with 51 vehicles raising a combined $24bn...

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Markit Recap – 1/16/2017

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Speeches by UK prime ministers were rarely market moving events, despite what some of the more breathless commentators in the broadcast media would have you think. But perhaps this has changed since the Brexit referendum in June last year, even if the spin doctors manage the message in advance.

The main thrust of Theresa May’s speech this week was leaked in the days leading up to her address, so traders and investors were not exactly hanging on her every word. But there were still some pronouncements that did affect sentiment, particularly in the FX markets, such as the confirmation that the final deal will be put to parliament...

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Leveraged Loan Insight & Analysis -1/16/2017

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Non-sponsored MM new money picked up in 2016; refinancings dropped

Non-sponsored lending dropped to US$86bn in 2016 from US$93bn in 2015. In contrast with every other major market segment (overall, leveraged, investment-grade, institutional, middle market sponsored) which witnessed a quarter over quarter increase in volume in 4Q16, non-sponsored middle market lending of US$22bn, was down 7%. Refinancings, the main driver of volume since the credit crisis, were down 21% in 2016 to US$53bn. Most of the refinancings were done in previous years and there was not that much in the form of opportunistic refinancings as pricing has somewhat stabilized in this market...

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The Pulse of Private Equity - 1/16/2017

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Has US add-on activity peaked?

Last year, US private equity investors added on to extant holdings so frequently that the proportion of add-ons to all buyouts hit no less than 64%. The steady increase over the past six years, and especially the rapid surge of 3% even as overall activity fell, both speak to the increasing maturation of adding on as a PE investment strategy and its relative attraction in the current environment...

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Private Debt Intelligence - 1/16/2017

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Private Debt Fundraising Success, 2012 – 2016

Although private debt fundraising in 2016 did not match the levels seen in previous years, Preqin research finds that a record proportion of funds exceeded their target size. However, the year also saw funds take longer to reach a final close, on average, than in any previous year as smaller managers struggle to attract capital at the same rate as the most experienced firms.

In 2016, nearly a quarter (23%) of private debt vehicles exceeded their target size by more than 125%, while a further 38% of funds achieved 101-124% of their target...

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Leveraged Loan Insight & Analysis -1/9/2017

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2016 middle market syndicated loan issuance lowest since 2009

Middle market syndicated loan issuance only reached US$139bn in 2016, down 3% from 2015 levels and the lowest annual level tracked since 2009. Several factors drove the lower levels. The non-sponsored market was the biggest culprit as issuers had no incentive to hit the market to refinance as long term financings were locked in during previous years. Furthermore, slow growth and uncertainty surrounding the economy and macro events such as...

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The Pulse of Private Equity - 1/9/2017

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First-time US PE funds make slight comeback in 2016, but still a low portion of total fundraising

First-time private equity funds in the US amassed just shy of $7.5 billion in 2016, across 26 pools of capital. Although both figures were distinct increases from 2015 - which logged 17 first-time PE funds and $4.6 billion raised - as a proportion of total US PE fundraising, first-time fundraising activity still remains at a considerable low relative to earlier in the past decade...

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Private Debt Intelligence - 1/9/2017

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Private Debt: 2016 Fundraising Update

In 2016, the private debt industry saw a cool-off in fundraising following the banner year in 2015 when almost $100bn was raised. The year was also characterised by a concentration of capital among the larger, more experienced managers while the fundraising marketplace grew increasingly congested as investor appetite for private debt increases.

Overall, 119 funds closed globally raising a combined $74bn, with Preqin expecting these figures to rise by up to a further 10% as more information becomes available...

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