This week we continue our series on best practices of top private credit firms with a look at how underwriting teams partner closely with their internal colleagues to ensure the most favorable execution for their sponsor clients and investors.
Clear communications with private equity partners at the deal screening stage is essential. Quick and decisive feedback (“a quick No is better than a delayed one”) allows them to make contingency plans if a lender group doesn’t materialize along expected lines. Good credit partners can also help structure financings to win deals in hypercompetitive situations.
Consistent and thoughtful feedback over time is invaluable to our competitive position relative to other, less-predictable lenders...
“It is very clear the narrative is changing.” – Thorsten Slok, chief economist, Apollo.
Featuring Charts
Chart of the Week: Common Ground
Higher for longer has compressed leverage for both cov-lite and cov-heavy loans. Source: LSEG LPC(Past performance is no guarantee of future results.)
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Chart of the Week: Rate Expectations
Loan participants see higher defaults from 1.6% today, but not much higher. Source: PitchBook/LCD(Past performance is no guarantee of future results.)
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Chart of the Week: No Ifs, Ands, or Cuts
Market observers now think a rate cut at the Fed’s June meeting is unlikely. Source: The Daily Shot(Past performance is no guarantee of future results.)
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Chart of the Week: Honey, I Shrunk the Interest Coverage Cushions
The Fed’s “higher-for-longer” has compressed leverage loan coverage ratios. Source: PitchBook | LCD(Past performance is no guarantee of future results.)
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Chart of the Week: All About Portfolios
Top three criteria investors use to select credit managers are portfolio-centric. Source: Coalition Greenwich 2023 Private Credit Market Structure Study(Past performance is no guarantee of future results.)
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Chart of the Week: Stepping Down
Private borrower covenant (not payment) default rates fell for third straight quarter. Source: Lincoln International Proprietary Private Market Database(Past performance is no guarantee of future results.)
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Features
Middle Market & Private Credit – 4/29/2024
How Does the Default Outlook for the Middle Market Compare to BSL? Download FitchRating’s Report here. Fitch tracks defaults in our portfolio of about 300 middle market loans that we rate privately for asset managers…. Login to Read More...
View ArticlePDI Picks – 4/29/2024
Fundraising falls flat There’s been talk of a modest revival in capital raising this year, but the first quarter may have lowered expectations. After a difficult time on the fundraising trail in 2023 as limited partners suffered from the denominator effect and lack of distributions, private debt managers were looking forward to a more benign…
View ArticleLeveraged Loan Insight & Analysis – 4/29/2024
Leverage declined for both direct lending and syndicated deals in 1Q24 Total leverage on sponsored middle market deals ticked down to 4.44x in 1Q24, driven by a drop in first lien leverage…. Login to Read More...
View ArticlePrivate Debt Intelligence – 4/22/2024
The relative attractiveness of alternative asset classes has shifted significantly over the past few years as interest rates have risen and the economy become much less certain…. Login to Read More...
View ArticleLeveraged Loan Insight & Analysis – 4/22/2024
US sponsored middle market direct lending volume fell by 10% in 1Q24 Overall sponsored middle market loan volume fell by 6% to US$31.7bn in 1Q24, though it still represented a 46% gain year-over-year. Breaking out this activity, direct lending deal flow amounted to US$22.8bn in 1Q24 versus US$8.8bn of syndicated deals…. Login to Read More...
View ArticleMiddle Market Deal Terms at a Glance
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Beginning in July 2022 The Lead Left published a series of articles on credit market. This report consolidates those articles.
Cov-lite trends Inflation & rising interest rates – LIBOR to SOFR transition Mega-tranche uni trend ESG takes center stage Login to view interactive report and download PDF version. … Login to Read More...
Beginning in September 2021 The Lead Left published a series of articles on supply chain. This report consolidates those articles.
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