This week we chat with Stephen Nesbitt, Chief Executive Officer of Cliffwater LLC. Cliffwater is one of the largest alternatives advisory firms, assisting clients globally in their allocations to hedge funds, private equity and real assets. The Lead Left: Steve, tell our readers a bit about Cliffwater. Steve Nesbitt: We advise pensions and endowments. Think…
Last year’s downturn-related worries caused bond price and yield swings, while private credit remained relatively insulated from market moves.
Source: Cliffwater Direct Lending Index and BofA Merrill Lynch US High Yield Effective Yield The red line in the chart is the *Cliffwater Direct Lending Index (CDLI) current yield, which is based on the investment income of the underlying assets held by public and private BDCs. BDCs invest in middle market companies, and the Index…
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Demand for PE exposure to slacken eventually?
In 2016, 87.6% of private equity funds that closed in North America and Europe hit or exceeded their targets. Even compared to the heights of 2014 and 2015, that figure represents a clear high of the decade, and, moreover, the extent to which limited partners of multiple types are eager for exposure to the PE asset class. Given that 356 funds closed in 2016—a lower tally than observed in any of the three preceding years—but the average fund size soared to nearly $765 million...
Investor Views on the Key Macroeconomic Factors Affecting the Private Debt Industry
Institutional investors currently hold the private debt industry in extremely high regard, with 93% of respondents surveyed by Preqin at the end of 2016 stating that their investments had either met or exceeded their expectations in 2016. However, investors will be keeping an eye on the macroeconomic factors that affected their portfolio in 2016 and are likely to make an impact in 2017...
Contact: Blake Udland Blake.Udland@spglobal.com
It is no secret that a divide - maybe a chasm - has opened up between the US and Europe. Donald Trump's mercantilist views put his presidency at loggerheads with the globalist EU, though a post-Brexit UK may yet turn out to be an ideological bedfellow.
But this week we saw signs that a division is manifesting itself in the credit markets. The Markit CDX.NA.IG has rallied steadily in recent months - since Trump's election victory on November 8 2016, the index has tightened from 75bps to 60bps. Over the same period the Markit iTraxx Europe was just 2bps tighter at 71bps. The 11bps basis between the two on-the-run indices is the largest for more than three years...
Unitranche loses favor in 1Q17 as sponsors gravitate toward second-lien
A recent middle market lender survey revealed that sponsors are favoring the first/second lien structure according to 42% of respondents. Meanwhile, in the survey carried out by Thomson Reuters LPC, 27% said the unitranche is the most favored structure by sponsors today. This is a meaningful departure from this time last year when half of the buyside and sellside survey respondents said sponsors preferred the unitranche structure. More onerous call protection, higher pricing and the need for covenants are typical of the unitranche...