A combination of corporates flush with cash and the pressure of high purchase price multiples has created tougher conditions for private equity buyers.  

Expectations in recent months of higher rates have caused volatility in options markets to diverge between equities and bond yields. Sources: Citi, Bloomberg, IIF via The Daily Shot

As Libor rates dropped post-crisis, Libor floors on leveraged loans have followed suit, although remaining in the 100 bps range. Source: Thomson Reuters LPC, quarterly middle market term loan yields  

After a long drought issuers are again accessing the loan market for re-pricings to lower borrowing costs.

Reported cash flow growth of all institutional loan issuers has slowed from nearly 20% to just over 5% during the past four years of weak economic recovery.

Over the past three years, private equity sponsors have cut the time in half they are taking dividends from LBOs. Source: S&P/LCD

The share of middle market borrowers with 50% excess cash flow sweeps has grown since the credit crisis. Source: S&P Capital IQ

The total share of loans that waived or reduced cash flow sweeps is still not back to pre-crisis levels, but those that waived sweeps is at an all-time high.

Cash flowed into retail loan funds for the first time in two months. The $530 million figure was also the largest such in-flow in more than a year. Source: S&P/LCD, Lipper

Private equity deal closings are at their lowest level in almost four years, as buyers turn cautious on purchase price multiples.Source: PitchBook