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Markit Recap – 1/2/2017

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John Maynard Keynes said we live in a world of irreducible uncertainty, while neoclassical economists state that perfect information is available and people make rational expectations. The events of the last decade suggest that the former school of thought has more credence, though “freshwater” economists would no doubt disagree.

Uncertainty of the political variety looks set to be the overriding theme for 2017, regardless of whether one thinks the market is driven by rational agents or not. A new US president promising radical policy changes; elections in France, Germany and the Netherlands...

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Leveraged Loan Insight & Analysis -1/2/2017

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Just shy of US$2tr 2016 US syndicated loan volume is flat year over year

US arrangers pushed almost US$2 Tr through retail syndication in 2016, levels on par with 2015 totals but down modestly compared to the US$2.1tr raised in 2014. The year got off to a slow start as the market volatility that was observed in the oil and gas and commodities sectors in late 2015 carried over to the first quarter of 2016, dampening lender appetite and limiting the pipeline of deals...

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Private Debt Intelligence - 1/2/2017

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Infrastructure Debt Rises in Prominence

Although banks are the primary providers of financing for global infrastructure projects, liquidity and capital requirements can prevent them from fully serving the market. This has led to an opportunity for the unlisted fund management industry to become a significant niche player in the provision of debt financing for infrastructure...

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The Pulse of Private Equity - 1/2/2017

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What is in store for US private equity in 2017?

After a high-water mark for US private equity activity in 2015, last year experienced a significant slowing in not only the number of closed deals but also total deal value, the latter ameliorated by a bevy of blockbuster transactions. This was driven in part by the progression of a typical investment cycle, wherein after a steady ramp-up in dealmaking the market attracts more and more firms looking to cut deals and consequently becomes pricier...

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Markit Recap – 12/12/2016

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It’s that time of year when analysts dust off their crystal balls and make predictions for the next 12 months. In December 2015 not many were forecasting that Britain would vote to leave the EU, and even fewer were betting on a Donald Trump presidential victory, so investors would be wise to treat such missives with caution. Political risk is a capricious beast, even for the most seasoned market observers.

But, caveats aside, there seems to be a consensus forming that 2017 will be tough year for one particular asset class: emerging market debt. A Trump presidency will usher in a new era of lower taxes – especially for high earners – and expansionary fiscal policy...

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Leveraged Loan Insight & Analysis -12/12/2016

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2016 MM CLO volume hits highest level post credit crisis

While the upcoming risk retention rules have certainly slowed broadly syndicated CLO volume in 2016, the middle market has bucked the trend. Middle market CLO issuance has reached US$7.7bn so far in 2016, surpassing last year's $5.8bn and reaching the highest level since 2007. This is a pleasant surprise as most managers that took LPC's Middle Market Investor Survey at the beginning of the year were only expecting to see around US $4.5bn in issuance this year...

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Private Debt Intelligence - 12/12/2016

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UK-Based Private Debt Fundraising

It is perhaps unsurprising that the UK has become the predominant market for the European private debt industry ever since regulation fuelled the growth of the market in the aftermath of the Global Financial Crisis. The UK accounts for a higher proportion of fund managers than any other European country, with 133 of the continent’s 334 fund managers located in the UK, while 186 active investors are also headquartered in the country holding a combined $3.9tn in assets under management...

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The Pulse of Private Equity - 12/12/2016

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PE outperformance to persist?

Only two private equity fund vintages are still underperforming relative to public indices, net of all fees, as calculated by PitchBook using the Russell 3000 Index. Funds in those particular vintages can safely be assumed to be overly impacted by the global financial crisis, while the significant outperformance of funds from vintages prior to the boom times of 2006 and 2007 can also be chalked up to a highly fervid dealmaking environment...

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Leveraged Loan Insight & Analysis -12/5/2016

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Flex factor highlights investor pushback in November

Flex activity in the U.S. institutional loan market favored investors in November. Thomson Reuters LPC's Flex Factor registered an average flex score of 1.5 last month, signifying a higher ratio of investor friendly changes made to deal terms. It was the first time it has been above one since February's average score of 3.5. In all, 19 deals flexed higher in November against 13 reverse flexes. It was the least amount of reverse flexes in a month since March...

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The Pulse of Private Equity - 12/5/2016

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US PE firms dial down their pace of investing in Canadian startups

In 2015, no fewer than 159 private equity firms with headquarters in the US cut a deal with a Canadian company, a clear high for the decade. That pace has slowed considerably even as general Canadian PE activity has declined, with 105 firms active within the country through the end of October. The drivers of the decline are likely the same as in the US: a lack of quality targets given the surge in buying over the last couple of years, competition, and a surplus of dry powder contributing to loftier prices...

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