BDC portfolio marks expected to move moderately lower BDC portfolio companies are being closely monitored to gauge stress as a result of the higher interest rate environment, the degree of pressure on margins and declining interest coverage ratios for over-levered borrowers. The most recent, indicative data available does not show any significant deterioration yet although…
Total leverage drops on 2023 US LBO deals So far this year, US LBO activity has been very slow. Year-to-date syndicated LBO loan volume of around US$18bn is running 70% lower year-over-year. Meanwhile, total debt to Ebitda levels on large corporate LBO deals has dropped to an average of 6.2x this year, nearly a whole…
US syndicated sponsored middle market loan volume totals US$4.3bn in 2Q23 Sponsored-related activity in the loan market has been slower in recent quarters as higher interest rates and tightening lending conditions has made it more difficult for private equity shops to execute on M&A deals. Private credit continues to take a much larger share of…
US Single-B volume share increases in 2Q23 Completed US loan volume to issuers with a Single-B rating totals US$30.5bn so far in 2Q23, comprising 25% of leveraged volume. This is up from last quarter’s 22% share and is the highest since 1Q22’s 28%…. Login to Read More...
BDC first-lien debt valuations increased but second-lien and subordinated marks fell in 1Q23 BDC first-lien debt valuations climbed but second-lien and subordinated debt marks fell in 1Q23. The weighted average mark on BDC first-lien debt holdings increased by 25bp, to 96.59% in the most recent quarter. In contrast, second-lien and subordinated debt declined by 18bp…
B-rated yield premium widens for US issuers in 2Q23 Primary loan yields in the US institutional loan market have widened slightly this quarter. However, when looking across issuer ratings, riskier credits have seen a bigger increase. At an average of 8.32% so far this quarter, the average primary yield on first-lien institutional term loans… Login
Interest coverage ratios on new loans remain well below year-ago levels Against a backdrop of sharply higher interest rates in the last year, interest coverage ratios have moved lower. The average interest coverage ratio of 2.45x on new middle market sponsored deals in 1Q23 was well below the 3.07x posted a year earlier… Login to
US institutional primary yields widen to 10.26% in 2Q23TD After plummeting in March, activity has picked up in the institutional market. However, issuers are facing higher yields on average so far this quarter. After a huge jump in 3Q22, average yields were relatively flat in the last two quarters, as higher base rates were compensated…
Middle market LBO purchase price multiples declined in 1Q23 Middle market LBO purchase price multiples declined from 12.3 times in 2022 to 11.4 times in 1Q23, the lowest level since 3Q20. While purchase price multiples declined, the equity multiple was only down minimally, to 7.3 times, from 7.4 times in 2022…. Login to Read More...
US sponsored middle market direct lending volume retrenched in 1Q23 Last quarter, there was US$12.5bn of US sponsored middle market direct lending volume. This was 49% lower quarter-over-quarter, 45% lower year-over-year, and the lowest level since 2Q20. The 204 deals across both the syndicated and direct sponsored middle markets in 1Q23… Login to Read More...