Pricing, OIDs also widen for double B issuers in today’s market Pricing for double-B rated issuers has widened significantly this quarter. The average yield, assuming a three-year term to repayment, on first-lien institutional term loans for BB rated issuers is 6.19% so far this quarter, up from a much lower average of 3.94% in 1Q20….
The consolidation question Download PitchBook’s Report here. If the current downturn mimics the 2008 financial crisis, private equity may see a few years of industry consolidation before diversifying again. In 2007, on the eve of the GFC, firms with at least $10B in AUM accounted for about 41.1% of the industry’s capital…. Login to Read More...
Special Situations Gather Momentum Private debt fundraising has slowed down in 2020 – so far this year, there have been 44 funds closed raising a combined $35bn. Strategy wise, direct lending continued to dominate the market closing 10 funds in Q1 2020… Login to Read More...
Crunch time for the BDC market Current trading is looking bleak for BDCs, but they’ve come through even worse in the past. BDCs are expected to see significant write-downs and defaults on portfolio company loans because revenues collapsed in much of the economy. A decline in the net asset value of BDCs may end up…
Avg. bid on Refinitiv’s BDC Visible Loans Benchmark remains at the 80 context Loans held by business development companies with mark-to-market pricing have stabilized in the 80 context in the last few days. Refinitiv’s BDC Visible Loans Benchmark provides investors with a daily mark on roughly US$20bn in first and second lien loans held by…
April volume retreats as expected, May forecast is weak Direct lending volume retreated in April, with transactions slipping to 43 from 67 in March, according to Direct Lending Deals. It was the slowest month for deal flow since DLD launched last September, and most of the mandates were underwritten pre-Covid…. Login to Read More...
The bankruptcy question Download PitchBook’s Report here. A looming question over the next several months is how many PE-backed companies will be forced into bankruptcy. The odds suggest an increase in PE-backed bankruptcies as cash flows begin to dry up in the short term. According to PitchBook’s Quantitative Perspectives, GFC-era data offers some clues on what…
Investors’ Response to COVID-19 As a result of a survey conducted by Preqin to investors in April 2020, 59% of investors said that the number of commitments they plan to make to alternatives in 2020 has “slightly” or “significantly” decreased. Investors are also reducing the amount of capital they intend to commit to alternatives; sixty…
The passing opportunity for direct lenders Companies that may have gone to the syndicated finance market are looking closely at more private alternatives. In Europe, a leveraged finance market which had effectively been on hold since the covid-19 outbreak emerged in March has been slowly waking up. But, as it does so, banks are beginning…
Socially distancing from high multiples Download PitchBook’s Report here. The median M&A multiple clocked in at 8.2x in Q1. That’s down from last year’s 9.8x median, according to PitchBook’s just-released North American M&A Report. One quarter does not a year make, but 2020 is probably an exception. The Q1 dip included two normal months, which won’t…