“The world has put all its Covid eggs into the vaccine basket. There is no Plan B.” – CLO manager. What happened to CLOs during Covid? We asked a number of experts on the topic, including rating agency friends and top credit managers. Here’s a summary of their opinions: First, because CLO assets represent roughly…
“Anytime loan market technicals shift, there’s always a view that CLOs are the end of Western civilization as we know it.” So a top CLO manager related his experience over several decades. Regardless of actual historical performance, collateralized loan obligations are periodically hauled out by the media, excoriated for reckless behavior, and dismissed as just another…
An astute Lead Left reader sent us the following note regarding last week’s commentary: “Besides the beneficial economic impact of pent-up consumerism, the Biden stimulus package, and vaccine distributions, you should also mention the healthy state of household savings,” he wrote. “February’s data [just released] showed family net worth’s hit a record high of $130.2…
In February 1983 your correspondent bought his first house with a 13% 30-year fixed rate mortgage. Why fixed? Because the year before, the 30-year had soared to almost 18%. Higher interest rates were a fact of life. We stubbornly stuck to the fixed rate option in succeeding refis over the next two decades. Since the…
We wrap our special series with an outlook for private credit. The value proposition of the asset class was fully supported through last year’s extreme volatility as experienced managers and their portfolios emerged mostly unscathed. But as market conditions develop this year, how will private credit terms be impacted? BSL technicals, such as fund flows,…
We continue our special series on the outlook for the year ahead with a look at the capital markets. What are the moving parts impacting funds flow, asset characteristics (volume, prices, and yields), and quality of deal issuance? With each passing day, the prospect for lower infection rates improves. Investors expect vaccine distribution to reach…
It was just another painful ramification of the pandemic. We’re referring, of course, to the nationwide absence of Grape-Nuts on supermarket shelves. Graver consequences of COVID-19 abound, but the whole point of comfort food is to be there in times of duress. First produced in 1897 by Mr. C.W. Post, Grape-Nuts contains neither grapes nor…
We conclude our special series, “Five Biggest Private Capital Surprises of 2020,” with: Surprise #5: The M&A Big Bang Last July we published a white paper (see “COVID-19 and M&A Activity”) showcasing conversations with leading middle market investment bankers. They reported distinctions between businesses hit by the pandemic and those depending less on the consumer…
We continue our special series with the fourth of “Five Biggest Private Capital Surprises of 2020”: Surprise #4: Which Industries Mattered? For experienced credit managers, diversity is a critical guiding principle. This applies to both industry concentration as well as commitment sizes. The question coming into last March’s downturn was, have we made the right…
We continue our special series with the third of our “Five Biggest Private Capital Surprises of 2020:” Surprise #3: Where Are the Distressed Loans? Last April as the pandemic crisis unfolded, the CEO of a $20 billion asset manager cited $1 trillion as the volume of potential distressed credit investments. COVID has presented, he said,…