These partnerships are helping to drive the growth of the DC market, which is expected to rise to about £1 trillion by 2030 (according to PLSA). The largest of these plans is estimated to be committing to between 10%-30% in private/semi liquid market strategies. NEST, the largest DC master trust in the UK has stated […]
These partnerships are helping to drive the growth of the DC market, which is expected to rise to about £1 trillion by 2030 (according to PLSA). The largest of these plans is estimated to be committing to between 10%-30% in private/semi liquid market strategies. NEST, the largest DC master trust in the UK has stated […]
From a risk perspective, CLO defaults are rare; no AAA tranche in either US or European CLOs has ever defaulted. The historical default rate for all CLO tranches is just 0.11%, and none occurred post-GFC until 2021. Then only after portfolios had been partially weakened from loan credit quality issues emerging during the Covid-19 pandemic. […]
In a note last week, our content partners at PitchBook LCD highlighted “the high level of CLO paydowns and deal calls, which has pushed more than $50 billion back into investors’ hands — and could add up to $90 billion more.” These paydowns totaled over $52 billion so far this year, more than the combined […]
Media coverage at the time trumpeted how banks were fighting to regain lost share to direct lenders. It also warned that this competition would hurt private credit returns by forcing those managers to cut their spreads to keep good assets from going away. Another measure of non-bank success has been the ratio of new deals […]
As we discussed in our Best Practices in Private Credit series, portfolio construction is everything. With little way out short of refinancings or company sales, how these loans perform will reflect directly on investor returns, not how they trade. This puts the onus on portfolio managers to select not just the highest-quality issuers, but the […]
The Magnificent Seven, representing 40% of the Nasdaq 100, is an extreme example of industry concentration. The market cap of Nvidia alone was $3 trillion at one point, vying with Apple and Microsoft as the world’s most valuable company. So much for diversification. Great when tailwinds are supporting that sector, but when they’re not you […]
Partnering with top-tier private equity firms also creates alignment with more defensive, growth-oriented sectors. Not coincidentally, these businesses retain the highest purchase price multiples, thereby assuring the most conservative loan-to-value ratios. Finally, these PE sponsors and their operating partners identify secular trends in industries where roll-up strategies can build long-term value. Rather than waiting to […]
For investors, then, conditions remain propitious for private credit. The delivery of yield premiums to liquids, lower risk, and predictable income should continue. With rates still high, leverage should remain in a range. And the more growth-oriented sectors will likely continue to offer the best opportunities for investing and financing… ▶︎ Read June 10th 2024 […]
The media seems to characterize amendments and extensions as financing gimmicks, but they are well-worn features of the leverage finance playbook. As interest coverage cushions are squeezed, giving borrowers room to maneuver enhances their flexibility and resilience. The same theoretically could be said about cov-lite and PIK-toggle features. Sahar panelists spoke at length about how […]