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Private Debt Intelligence - 11/7/2016

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Private Debt Dry Powder by Fund Type

The past few years have seen a large amount of investor capital in private debt funds remain unspent by fund managers, with strong fundraising activity resulting in a significant ‘wall of capital’. In 2016 so far, private debt dry powder has climbed to $199bn, up from $191bn at the start of the year, although levels of uncommitted capital have fluctuated across different fund types.

Dry powder held by distressed debt managers has risen by nearly a third (31%) since the end of 2014 and now stands at $63bn, the highest of any fund type...

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Leveraged Loan Insight & Analysis -10/31/2016

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U.S. CLOs posted their best month since June 2015 with issuance of $8.4 billion in October, taking year to date issuance to $54.5 billion. In addition to new issuance, much of the energy in October was focused on refinancings and resets in advance of the upcoming risk retention deadline. After the new regulation comes into effect on December 24, compliance with risk retention rules will be required for deals that refinance...

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The Pulse of Private Equity - 10/31/2016

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Secondary Buyouts Still a Primary Route for PE Sellers

335 secondary buyouts have been closed through the end of September, putting the year on pace to fall short of 2014’s tally of 482 but still third-highest of the decade. Given the impact of outliers, this year’s total secondary buyout value may not impress as much as much as those of 2007 or 2015, but it is still quite considerable. In short, private equity sellers are still utilizing fellow sponsors as an exit route nearly as avidly as they were in the past two years...

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Private Debt Intelligence - 10/31/2016

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Europe-Focused Private Debt Fundraising

The Europe-focused private debt industry has enjoyed substantial fundraising success in recent years and many countries within the region have seen heightened alternative lending activity in the last decade. However, a notable decline in direct lending in 2016 YTD has contributed to a wider slowdown in fundraising activity focused on Europe throughout the year...

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Markit Recap – 10/24/2016

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Credit investors, whether in cash or synthetics, often welcome corporate restructurings by distressed firms. Job cuts, rationalisation of operations and, in particular, asset sales are usually regarded as bondholder friendly actions.

But this 'wasnt the reaction when Banca Monte dei Paschi di Siena (MPS) announced plans to restructure its ailing business. The Italian bank said that it would reduce jobs by 2,500 – cutting 10% of its staff costs - and close 500 of its 2,000 branches over the next three years. MPS also declared that it would sell its payments processing unit for €520 million...

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Leveraged Loan Insight & Analysis -10/24/2016

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Pricing soars on oil and gas borrowing base revolvers

After collapsing to a 10-year low of less than $30 in January, oil prices are now in the $50 per barrel range. While prices might have stabilized, the industry continues to suffer severe consequences. Defaults have escalated and recovery rates are down significantly from their historical levels. According to Moody's, loans that are backed by reserves for exploration and production companies have fared better than other debt types...

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The Pulse of Private Equity - 10/24/2016

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PE Fundraisers Going Bigger in 2016 Portends Emerging Spread in Success?

At $225 million, the median US private equity fund size is higher thus far in 2016 than in the several years prior. This is despite relatively healthy fundraising activity in general, with 57 closed vehicles in the third quarter alone; one may suppose that diminished activity could artificially inflate median fund sizes, as the most successful firms are still able to close while others miss out, but that is not the case this year. The increase in size is attributable to a confluence of factors...

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Private Debt Intelligence - 10/24/2016

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Private Debt Fund Performance by Strategy

Preqin research finds that the performance of the most prominent private debt strategies – direct lending, distressed debt and mezzanine funds – has been robust, although there is clear fluctuation between vehicles of different vintage periods.

Among 2008-2009 vintage private debt funds, it is distressed debt funds that have the highest median net IRR of any strategy, with returns of 14.8%. These funds were making their first investments during...

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Markit Recap – 10/17/2016

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There are no shortage of factors that have troubled market participants this year: Brexit; US monetary policy direction; fragility in European banks; oil prices. All of these issues, and others, have caused credit spreads to widen at various intervals in 2016.

But the last few weeks have seen calmness return to the credit markets. The VolX Europe, which shows the realised volatility in the Markit iTraxx Europe index, hit 26.4% this week, which is the lowest level for almost two
years...

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Leveraged Loan Insight & Analysis -10/17/2016

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Influx of second-lien issuance has investors pushing back on terms

Recently, investors have been more open to the lower rated, higher return type of loans that were more scarce earlier in the year. In particular, second-lien issuance has picked up. Just two weeks into October and there has already been US$1.5bn in completed second-lien loan issuance which would account for 57% of second-lien issuance for all of 2Q16. This influx of higher yielding assets into the market has caused more push back from investors during negotiations...

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