“The unitranche was invented in response to broken capital markets, when banks were backing away. Today it’s thriving when markets are booming.” The size of these financings has also grown dramatically. How large could they get? We remember the same questions being asked about broadly syndicated loans in 2007. If the largest direct lenders collaborate, […]
According to Refinitiv LPC, US unitranche volume came to almost $22 billion last quarter – the highest level they’ve tracked historically. At the same time, one-stop risk/return dynamics have moved in favor of issuers. The average debt/ebitda is now at a record high 5.9x, with all-in Libor spreads hovering around 600 bps. As we told […]
In October 2015 we published a white paper: “The Unitranche – What it is, and Why it Matters.” In it we called the unitranche “one of the most innovative, and increasingly popular, financing tools in the middle market.” The following year Ares reached a milestone by leading, for Thoma Bravo’s Qlik Technologies, the first $1 […]
As we conclude our European private credit series, let’s review what we’ve learned: Europe suffered a similar Covid slump (and enjoyed a similar rebound) as the US. Deal volumes are at record highs. Europe retained the country-by-country distinctions they had pre-Covid. Pricing in the US and across the pond is close. Though European upfront fees […]
This week’s Chart of the Week highlights how US and European private debt fundraising came into Covid with a head of steam, slowed, and has now picked up. Our content partner, , recently published excellent commentary related to investors’ views of the “European opportunity.” One CIO said it started looking more attractive when US yields […]
We continue our conversation with Lincoln International’s European office. “US and Europe are competing markets,” Xenia Sarri told us. “The US was increasingly aggressive six years ago, but now terms are more favorable in Europe. There are no baskets around restricted payments. No excess cash flow sweeps, no amortization and tighter flex language. Are there […]
Calculating European direct lending volume is a bit dodgy. But we can triangulate from other metrics. The par amount of all leveraged loans was €15 billion in 1998, per S&P/LCD. It grew to 140 billion before the GFC, and is now a record €240 billion. Conservatively assuming one-third is held by non-banks, that puts it […]
Last week we tuned into Fitch’s European Leveraged Finance Mid-Year Update. The discussion – covering the economy, ratings, and structures – was virtually indistinguishable from recent US market conferences. Apart from the distinguished accents. Volume, for example, has returned to pre-Covid levels. Terms, that were so investor-friendly a year ago, are now decidedly issuer-friendly. Price […]
Our fondness for colorful metaphors led us, in our 2016 series, to compare European direct lending to Burger King’s new hot dog venture. The burger giant’s thesis was to apply “sixty years of flaming-grilling expertise,“ but also recognized they’d have to “chop the onions a little differently.” Apparently, hamburger prowess didn’t translate to frankfurters. They […]
Say what you will about last year’s Covid-induced downturn in the US beginning in March. But it paled in comparison to the UK’s economic cratering. Not since the Great Frost of 1709 had that proud nation suffered such a dramatic slump. But then, like the US, the UK and Europe began to recover in similar […]