PDF | Research |Week of May 16, 2022
Quote of the Week
“We went from not hiking until 2023 to the Fed hiking as much
as 300 bps in 2022. It’s really been a cycle on steroids.”
– Michael de Pass, global head, linear rate trading, Citadel Securities.
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Why ESG Matters:
Asset Integration
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Why ESG Matters
(Last of a Series)
We noted last week how various asset classes incorporate aspects of environmental, social and governance elements in their risk analysis of a business or manager. We wrap up our special series by examining how private credit integrates ESG into its various strategies.

Credit managers are typically not involved in the direct management of businesses they finance. An exception is impact investing. According to a recent Private Debt Investor article, private debt represents 34% of all impact investing AUM, with real assets and private equity at 22% and 19%, respectively. Noteworthy areas include healthcare, renewables, and housing.

Similarly sustainability-linked loans (SLLs) compel borrowers to reach given ESG goals. SLLs are a small but growing category within the overall $732 billion (per BloombergNEF) sustainable debt market. That suggests momentum for investors to seek green private debt alternatives as well...
Private Capital Call

Q&As with Lori Johnstone,
the Portfolio Manager at Pacific Life.
Private Debt Survey 2022

We conducted a survey of institutional investors to understand their sentiment amid the current market environment and how that is driving investment allocation.
Chart of the Week
Low Bar
More than 25% of loans have no penalties and only a one basis point incentive if ESG targets are met.
Source: Company filings and statements, Bloomberg
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Stat of the Week
Loan Stats at a Glance 
PDI Picks
Larger funds mean larger deals
A new average fund size record was set in Q1 2022, as private debt managers become more ambitious at the larger end of the market...
Leveraged Loan Insight & Analysis
US LBO activity remains healthy,
with volume totaling US$19.5bn so far this quarter
LBO activity has remained steady despite persistent headwinds in the financial markets this year. Refinitiv LPC has tracked roughly US$19.5bn in completed syndicated and clubbed US LBO volume so far this quarter, after 1Q22 saw US$52.8bn in volume...
The Pulse of Private Equity
Choppy fundraising ahead?
Market turmoil continues. The ripple effects will impact private equity deal flow and exits, and it will certainly impact fundraising. Our latest analyst note sees fundraising “tapering as demand outstrips supply.”...
Contact: Alex Lykken / PitchBook
Covenant Trends 
Percentage of First Lien Loans with
Affected Lender Voting Protection
High-Yield Bond Statistics
Weekly fund flows source: Lipper
Private Debt Intelligence
Asian regulations hinder private debt fundraising
Small and medium-sized enterprises form the majority of companies in Asia, accounting for 97% of business. They often face difficulties obtaining financing from traditional banks, which indicates a huge opportunity set for private debt...
Contact: Valerie Kor/ Preqin 
Debtwire Middle-Market
Institutional loan issuance shrinks
as issuers ride out higher pricing environment
Source: BofA US HY Index, Debtwire Par
In the face of a host of macroeconomic headwinds, not limited to persistently high levels of inflation, rising interest rates, an ongoing war in Ukraine and supply-chain issues, and notwithstanding the emergence of the world economy from...
Contact: Vincent Daigger / Debtwire 
Middle Market Deal Terms at a Glance
Select Deals in the Market
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