Archives| PDF | Research | Week of June 8, 2020
CLOs & Leveraged Loans 2020
THE CLO INDUSTRY GOES VIRTUAL
Join Randy Schwimmer for the panel
Middle Market: Leading the Troops in Battle

Tuesday, June 16, 4:00 PM (EST)
Q&A: 4:45 (EST)
“We are on a healing path for LBO financing. But we haven’t healed yet.”
– Andrey Kuznetsov, senior portfolio manager, Hermes Investment Management.
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High Yield Bonds and Private Credit
(First of Two Parts)
In our just-completed series on high-yield bonds [link] , we conclude that issuer and investor activity has largely been driven by technical factors: near-zero interest rates, the Fed’s support of fallen angels, and skewed-to-worse ratings for leveraged loans.

If this is the environment in the liquid market, how should investors be thinking of the illiquid market, i.e. private credit?

By contrast, as followers of this commentary know, private credit follows a very different path to that of tradable assets. Fundraising has occurred in earnest around the notion that providing investors with steady income (and issuers with long-term credit solutions), regardless of market volatility, is a major benefit...
  • Covid-19 and the Leveraged Loan Market
  • Covid-19 and Private Equity Activity
  • The Role of Direct Lenders
  • The Economic Outlook
  • The Best and the Worst Industries
  • The Great Stay-In vs. the Great Recession
  • Direct Lending….After COVID-19
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Chart of the Week
Relatively Yieldy
Over the past decade the yield on middle market senior secured loans has outpaced that of many other asset classes.
Source: S&P LSTA Middle Market Index; S&P LSTA BB-B Index; S&P LSTA Loan 100 Index; MSCI EM; MSCI World; Barclays Global Treasury 1-3 Year; Bloomberg Barclays Global Treasury 7-10 Year
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Stat of the Week
 Loan Stats at a Glance 
PDI Picks
Pain across the board
The covid-19 crisis has dished out equal treatment – hitting all types of sectors hard.

The subject of the chart above is the CLO market, but it makes a point that is equally valid for the private debt universe...
Leveraged Loan Insight & Analysis
Libor floors are back in the institutional market
Investors are demanding Libor floors on institutional term loans as the Libor rate continues to drop. While 3-month Libor has been in a declining trend since 1Q19, it has plunged since the COVID-19 crisis hit...
Contact:   Diana Diquez / Refinitiv LPC
The Pulse of Private Equity
How sponsors are handling the crisis
The economic impact of the COVID lockdowns was so swift that many investors “didn’t know what they didn’t know” at the outset. Many didn’t even know what the problems were, let alone fix them...
Contact:   Alex Lykken / PitchBook
High-Yield Bond Statistics
Weekly fund flows source:  Lipper
Covenant Trends 
Average EBITDA Adjustment Cap
for Synergies & Cost Savings
Private Debt Intelligence
First-Time Fundraising Falls in 2020
Over the last six years, private debt first-time fundraising has been stable. Around 50 funds have reached a final close each year, securing an average of $10.5bn...
Contact: Maria Zapata / Preqin 
Debtwire Middle-Market
Cost of borrowing rises 
across the leveraged debt markets in 2Q20
Source:  Debtwire Par
The cost of borrowing comes at a higher price in 2Q20 as risk is repriced in the leverage debt markets. Following several quarters of tightening spreads, the weighted average yield to maturity (YTM) of bonds issued so far in 2Q20 has increased to 7.1% from 5.2% in 1Q20...
Contact:  Vincent Daigger / Debtwire  
Middle Market Deal Terms at a Glance
Select Deals in the Market
This publication is a service to our clients and friends. It is designed only to give general information on the market developments actually covered. It is not intended to be a comprehensive summary of recent developments or to suggest parameters for any prospective financing opportunity.