Unitranche spreads, yields hit 2021 low in December

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Competition moved unitranche spreads 25 bps lower in December to an average of L+540, a monthly low in 2021, despite the stabilizing effect heavy volume in the fourth quarter had on pricing for smaller borrowers and non-unitranche LBO financing. The decline dropped all-in yields to 6.7%, also a monthly low last year.

Return requirements should keep pricing from slipping much further, especially as looming interest rate hikes will bump funding costs.