The Lincoln Senior Debt Index (Second of Three Parts)

Private debt, compared to private equity and real estate, is a relatively recent entrant to the alternative asset class. But that market has grown faster than others over the past decade. In 2007, just before the Great Recession, private debt AUM measured less than $200 billion. Today the universe of illiquid credit is $900 billion with growth estimates of 50% over the next 5 years.

As discussed last week the Lincoln Senior Debt Index provides lenders and investors a much-needed tool to assess portfolio performance and benchmark returns in an otherwise opaque market.

We continue our conversation with Lincoln’s Larry Levine:

Larry, what is the average yield investors can expect to achieve in the direct lending market?

“The average yield of the Lincoln Senior Debt Index is 9.6%. The decomposition of yield changes over time with recent yields being a function of spread and Libor floors. That highlights the importance and stabilizing qualities of floors, particularly when Libor dropped below 1.0%.