Luis Polonia, the former outfielder for nine major league baseball teams in the 1990’s, once observed of the late Yankees owner, George Steinbrenner: “He’s only interested in one thing. And I don’t know what that one thing is.”
We recalled Mr. Polonia’s pronouncement last week as we surveyed lenders on the state of the middle market. Whether an arranger competing to win lead business, or an asset manager looking for new financings, each struggled to capture one theme to describe market conditions going into the second half of the year.
For those underwriting or arranging deals, there was a palpable frustration at the lack of deal flow. “There’s not a lot of paper out there,” the capital markets head of one middle market shop told us. “And the quality is not great.”
His counterpart at another mid cap shop agreed. “We’re certainly busier than we were in the first quarter. And the second quarter started slow as well. But things have picked up in the last few weeks. Unfortunately what we’re seeing isn’t the highest quality.”