Direct Lending….After COVID-19
As we wrap up our COVID series, we turn our attention to the path ahead, as unclear as that is. Or as one economist put it succinctly: “Anyone who thinks we’re going to keep moving up in a straight line is living in La-La Land.”
The good news is markets have fully absorbed the shock of America stuck at home, and its impact on commercial activity.
The wide discount in secondary loan prices has shrunk. Credit investors are left with higher values, though fewer bargains. But what are the revenue and earnings assumptions behind those new values?
Credit managers now have a ring-side seat to deteriorating borrower performance combined with the issuer-friendly terms of past buyout financings. Expect those terms to change…
▶︎ Read May 4 2020 newsletter: here
Latest news
PE exit activity
Exit value fell to $102.6 billion in the second quarter—down 46.3% from the prior quarter and 7.4% YoY—while exit count dropped to 353, a 14.1% quarterly decline and a 5.4% rise against Q2 2025.
US BSL and MM CLO Performance Held Stable in July 2026
In July 2026, portfolio credit quality in reinvesting Fitch-rated U.S. BSL CLOs remained broadly stable from June. Net portfolio losses held at 0.5%. The Fitch weighted average rating factor also held at 23.1. The Fitch weighted average recovery rate declined slightly by 0.1%, while the weighted average spread fell by 0.01%.
