PDF | Research | Week of Feb 3 2025

Number three of our five themes for 2025: “Default position: Discipline and careful portfolio construction will keep portfolios clean.” 

There are clear reasons for a more bullish sentiment to take hold in private capital investment in the year ahead. A more certain macro backdrop, a decisive election result, US companies reporting above-expectation results, and the S&P 500 building on a strong 2023 by rising more than 25% in 2024, are building optimism.

Adding to this is the benign default environment for managers that structured deals appropriately in previous low-rate years. Proskauer’s private debt payment and bankruptcy default rate stood at just 0.70% in Q3 2024 (see our Chart of the Week). This compares favorably with the 4.47% BSL default rate reported by Fitch. The slight increase seen since mid-2023 comes from a low base and remains well below large caps...

BSL defaults at 3Q 2024 were more than six times those in private credit.  

• Click here to access Bloomberg's US Leveraged Finance Chartbook

To Monitor Upcoming US Institutional Loan Issuance, run PREL ＜GO＞ from a Bloomberg Terminal.

January's $186b of US institutional leveraged loan issuance was up $45.7b for an increase of 32.6% from the same month a year ago, making it the busiest January on record since Bloomberg began tracking the data in 2013...

Contacts: Vincent Daigger, Lara Wieczezynski / Bloomberg

It’s an area of investment that hasn’t had the best headlines in recent times, but debt providers believe there are good opportunities beckoning. 

Fundraising for real estate debt-focused funds fell 17 percent year on year between 2023 and 2024, according to Private Debt Investor data, with market onlookers citing a lack of liquidity, a dearth of projects begun during the pandemic years and a challenging macroeconomic environment as reasons for a pullback in commitments... 

Contact: Andy Thomson / Private Debt Investor

Unitranche pricing tightened significantly over the course of 2024, moving steadily lower in the first nine months of the year before edging higher in 4Q24...

Contact: CJ Doherty / LSEG

Carveouts accounted for 11.8% of all US PE buyouts in Q4 2024, a sequential quarterly increase...

Contact: Garrett Black / PitchBook

Contact: Eric Rosenthal / KBRA DLD

Middle Market & Private Credit

Fitch’s Privately Monitored Middle Market Portfolio Overview, 4Q24

Learn More

In the charts above, Fitch presents aggregate data for issuers in its Privately Monitored Ratings (PMR) portfolio. Fitch privately rates these issuers for asset managers...

Contact: Brad Hamner / FitchRatings

Launched Volume

New-issue Yields

Weekly Fund Flows

Weekly fund flows source: Lipper

Contact: Robert Polenberg / LevFin Insights

Debtwire Middle-Market

The blue line in the chart is the current dividend yield of the *VanEck BDC Income ETF (currently at 10.4% as of 3 February) that tracks the overall performance of publicly traded business development companies (BDCs, are lenders to privately held middle-market businesses that tend to be below investment grade or not rated, with most lending comprising of senior secured loans). The brown line displays the BofA Merrill Lynch US High Yield (currently at 7.1% as of 3 February), which tracks the performance of USD denominated below investment grade corporate debt publicly issued in the US...

Contact: Suneet Chandvani/ Debtwire 

Private Debt Intelligence

Investors stick to less risky debt strategies 

Read more in ‘Private Debt Q4 2024: Preqin Quarterly Update’

Private debt fundraising was at a five-year low in 2024 despite continued investor satisfaction with the asset class’ performance, with 59% saying that investments had met expectations and a further 28% stating they had been exceeded...

Contact: William Bennett-Lynch/ Preqin

Contact: Stefan Shaffer / SPP Capital Partners