We turn to #PrivateCreditMyth #7: “Recoveries will be worse than 2009.” This idea comes from the prevalence of record high borrower leverage and cov-lite structures. If performance deteriorates, lenders have no triggers until a payment default. By then, the business could be worth much less than what the sponsor paid for it. And possibly less […]
The ups and downs of secondaries Download PitchBook’s Report here. Last week we highlighted our new analyst note on extended holding periods. Now available, the note dives into the pros and cons of GP-led secondaries, which have steadily become more popular. The market has become the industry standard for handling successful assets that can’t be held…
First-Time Private Debt Funds Struggle to Raise First-time fund managers have struggled to raise capital in what has been difficult year for overall private debt fundraising. Managers closing their first private debt fund raised $9.7bn in total in 2019. The 38 first-time funds closed secured 9% of the total amount raised in the year…. Subscribe
Source: LevFin Insights Source: LevFin Insights Source: Lipper Contact: Robert Polenberg robert.polenberg@levfininsights.com
Myth #9: “Without a public benchmark, private credit returns aren’t dependable” Private credit assets are illiquid, and don’t trade. That distinguishes them positively from larger, liquid, public, yet more volatile, assets correlated with market moves. Middle market loan yields are therefore more stable through business cycles. Also, being illiquid, private credit demands, and achieves, a…
Senior direct loans in BDCs have maintained a steady 10% yield, better than high-yield bonds.
Are there tastier options than vanilla? Senior debt is still fundamental to many investors’ private debt portfolios. But, as competition increases, LPs are increasingly hunting for less populated spaces. While there is little evidence of investors falling out of love with the senior secured private debt market, competition for mid-market direct lending opportunities is such…