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Private Debt Intelligence - 2/27/2017

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Private Debt Management Fees Drop to Eight-Year Low

Fund terms within the alternative assets industry have been of particular focus over the last few years as investors have largely united to push managers for greater transparency and improved alignment of interest.

Within the private debt industry, this approach appears to be paying dividends with the average management fee reaching an eight-year low for 2016 vintage funds which charge a mean fee of 1.63%...

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Markit Recap – 2/20/2017

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The political polling industry is suffering a crisis of credibility after failing to predict Brexit and Donald Trump's victory in the US presidential election. A thorough overhaul of its methods is surely needed.

But in a world where political risk is more potent than ever, investors have little else to go on, and polls still have the potential to trigger considerable market volatility. A prime example this week was France, where polls showed far-right - and anti-euro - candidate Marine le Pen increasing her lead in the first-round presidential vote. The reaction in the credit markets was significant - French sovereign CDS widened from 56bps to 68bps in the space of three days, and is now over 40bps wider than levels reached in the post-Brexit aftermath of September 2016...

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Leveraged Loan Insight & Analysis - 2/20/2017

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Repricing wave will push institutional issuance close to quarterly record

Strong demand for floating rate assets has caused a frenzy in the leveraged loan market this quarter where issuers have been flocking to market to lower the spread on their institutional facilities. This has in turn caused institutional loan volume to spike, reaching US$149.5bn in completed issuance through February 15th. With roughly half a quarter remaining, completed institutional issuance is the fifth highest on record and about US$50bn lower than the US$199bn record set in 1Q13. Breaking down the numbers highlights the refinancing boom...

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The Pulse of Private Equity - 2/20/2017

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Steady volume of funds geared toward US lower middle market

Since 2013, a significant uptick in the number of private equity funds geared toward the lower middle market—sized between $100 million and $500 million, according to PitchBook methodology—has occurred. 2013 was undoubtedly a peak, with 107 closed in that year alone, but the volume has hardly slackened much since, as 94 vehicles were wrapped in 2016. One driver of this trend has undoubtedly been the entrance of new fund managers into the market...

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Private Debt Intelligence - 2/20/2017

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Credit Strategies Start 2017 with Positive Performance in January

Preqin research finds that credit strategies have maintained their positive performance from 2016, with a strong start to the year through January 2017, as investor and fund manager confidence in the strategy grows.

Credit strategies were the second best performing leading hedge fund strategy last year with annual returns of 8.50%, well outstripping the Preqin All-Strategies Hedge Fund benchmark (7.40%)...

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Leveraged Loan Insight & Analysis - 2/13/2017

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Covenant-lite volume will likely hit another record high in 1Q17

Covenant-lite loan volume has already reached US$90 bn in 1Q17 with two more months still left to go this quarter. With another US$35bn still in process, 1Q17 will likely be a brand new record high for covenant-lite issuance. Covy-lite volume had just hit a brand new record high last quarter at US$128bn, smashing the previous record set in 1Q14. These robust volumes are largely taking place during big refinancing waves like in the current environment...

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The Pulse of Private Equity - 2/13/2017

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Will elevated US PE inventory contribute to continued secondary buyout activity?

It is difficult to get a sense of just how many middle-market companies there are in the US, which is a critical statistic to have on hand when analyzing the impact of the heightened private equity inventory. According to a recent installment of the Middle Market Power Index from American Express and Dun & Bradstreet, there were 182,578 firms that had between $10 million and $999 million in revenue in 2016...

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Private Debt Intelligence - 2/13/2017

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Private Debt Investors Delighted with Fund Performance

At the end of 2016, Preqin conducted surveys with over 90 private debt investors in order to gauge their satisfaction with the performance of the private debt asset class and to ascertain their investment plans for both 2017 and long-term future.

More than a quarter (27%) of private debt investors surveyed stated that the performance had exceeded their expectations, an increase of nine percentage points compared to the end of 2015...

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Leveraged Loan Insight & Analysis - 2/6/2017

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Overall LBO leverage on the rise in 1Q17

Average leverage levels on both large corporate and institutional middle market LBO deals have shown a meaningful jump in 1Q17. With refinancings and repricings dominating the leveraged loan market, investors seem more willing to stretch on new money LBO deals. The average leverage level so far in 1Q17 is at 5.0 times first lien and 6.50 times total debt to EBITDA, up from 4.6 times senior by 6.1 times total last quarter...

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The Pulse of Private Equity - 2/6/2017

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Transaction sizes suggest relative US middle-market popularity for PE

The median private equity transaction with a US middle-market company fell slightly to $134.0 million in 2016, down a mere $4 million from the prior year. Given the minuscule magnitude of the decline, it's clear that there is still plenty of competition from not only strategic acquirers in the upper end of the market but also fellow PE firms that are keeping transaction sizes relatively high, among other factors...

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