In April 2015 we introduced the concept of the “cargo-pants strategy.” For direct lenders to compete against banks for leveraged loans, they needed to hold larger commitments. So managers raised CLOs, separate managed accounts, commingled funds, and BDCs to create loan storage pockets. They could then allocate large commitments across vehicles without any one holding […]
At recent private credit conferences we’ve been asked how managers think about portfolio construction. Kind of depends on your experience over the past twenty-two months. As one private equity partner told us, “we had a base case and a down-side case, but we didn’t have a no-revenue case.” Consumer-facing sectors had a rough time early […]
Thanksgiving week in the US capital markets is always a mixed blessing. Wonderful for families and friends, celebration and gratitude. But smack in the crazy year-end rush. Everyone juggling deals and parties – and running on fumes. Six weeks before it starts all over again. What will 2020 deal activity look like? Hard to beat […]
As investment managers run through the tape towards an incredibly productive 2021, many are asking what will the new year bring? No one could have foreseen a year ago vaccine success, or the 25% equities run-up. But we have have seen remarkable private credit performance over the past 24 months, so let’s highlight some key […]
Our friends at William Blair ended their 3Q survey with issues most impacting leveraged loans through year-end. Here are a few: Supply/demand equilibrium. Which comes first, supply or demand? Retail cash inflows and CLO capacity largely drive liquid loan demand. With private credit, it’s all about manager dry powder. There’s plenty of that. But as […]
Having moderated three private credit panels in the past ten days, a recurring theme we’ve heard is the record level of deal volume. What’s driving this unprecedented activity? In its recently published 3Q survey, William Blair reported $155 billion of institutional loans, nearly the highest number they’ve recorded. $92 billion was dedicated to M&A transactions. […]
We reported (in person!) this week from the SuperReturn Private Credit conference in Chicago, an event that always attracts top-shelf credit investors and managers. In a keynote interview with economist and former Federal Reserve governor, Randall Kroszner, we explored the contrast between two US economies: Covid-challenged, like restaurants, that are still in a recession, and […]
News reached us recently of a young walrus that had wandered south from his Arctic range in search of ice floes. Landing in Ireland, Wally began boarding luxury yachts. The property damage turned the whiskered wayfarer from “visiting celebrity to public enemy number one.” It all worked out, though, when a marine biologist enticed the […]
Of the many unanticipated consequences of Covid, one catching our eye was the recent NYT headline: “Birds Thrived During Lockdowns.” Seems that while we were stuck at home last spring, our feathered friends were out partying. Urban areas, otherwise crowding out some species, saw hummingbirds and bald eagles return at 14 times pre-pandemic levels. “I […]
Last fall, the Harvard Business Review examined Covid’s impact on supply chains. The pandemic, they wrote, “exposed vulnerabilities in the production strategies and supply chains of firms just about everywhere,” The study also presciently identified “the growing electronics content in modern vehicles” as a potential bottleneck. Today we are witnessing how the shortage of semiconductor […]