What Inning Are We In? (First of a Series)

That’s the perennial question that leading direct lenders addressed last week on a panel moderated by your correspondent at the 25th Annual Atlantic Conferences Middle Market Symposium. As the event was technically closed to the press, we can’t report on what was discussed. Instead, let’s cover the broad themes confronting market observers as they focus on where we are in the business cycle.

The “inning” metaphor is well-worn. We came across a media report forecasting the US is in the “final innings of economic growth.” That came out over two years ago (http://www.businessinsider.com/us-is-final-innings-of-economic-growth-2016-3).

We know the exuberance of the current leveraged loan market dates back to at least 2014. That’s when debt/ebitda levels started feeling toppy again. “This should last for a couple more innings,” investors told themselves, and modeled in a downturn for 2016 or 2017. But two years later, the mantra was, “It still feels like we’re in the seventh inning.”

With each passing year, the end of the game keeps getting pushed off. Accordingly we nominate for the 2018 Merriam-Webster Word of the Year: