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PDF | Research | Week of May 8, 2023

Quote of the Week

“The high-yield market is probably looking a little too optimistic right now.”

– Adam Abbas, co-head, fixed income, Harris Associates.

 
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Letter from Down Under (First of Two Parts)

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In our continuing series on global private credit, we next cover the history and outlook for the asset class in Australia.


In a visit to Melbourne and Sydney last week, we met with a number of clients and firms with exposure, appetite, or interest in private debt. What became clear in these conversations was how important context is to understanding how participants think about alternatives.


Australia’s economy is well known for being resilient. Before the Covid pandemic in 2020, it enjoyed one of the longest uninterrupted expansions – almost thirty years – among developed economies. While seeing some slowing in the current environment, that growth has given the continent a measure of stability compared to the volatility across global markets...

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Chart of the Week

Down Under Down

Australia’s credit growth has been slowing since peaking late last year.

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Source: The Daily Shot

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Stat of the Week

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Loan Stats at a Glance 

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Contact: Marina Lukatsky / S&P Global Market Intelligence

PDI Picks

Subordinated debt bucks fundraising trend

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The strategy appears to be claiming market share as fundraising shows signs of coming under pressure...

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Leveraged Loan Insight & Analysis

Interest coverage ratios on new loans remain well below year-ago levels

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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...

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Contact: CJ Doherty/ Refinitiv LPC

The Pulse of Private Equity

A shift away from mega funds?

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Most PE metrics got off to a slow start in Q1, but middle market fundraising stayed strong. According to PitchBook’s Q1 2023 US PE Breakdown, 41 MM funds closed in Q1, worth a combined $55 billion...

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Contact: Alex Lykken / PitchBook

Covenant Trends 

Percentage of Loans with an MFN Sunset

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Contact: Steven Miller / Covenant Review

High-Yield Bond Statistics

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Weekly fund flows source: Lipper
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Private Debt Intelligence

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Distressed debt fundraising

up as GPs seek $66.5bn

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Distressed debt funds are seeing more interest from LPs in the wake of recent bank collapses and a persistently challenging operating environment. While seven distressed debt funds closed in the first quarter of 2023...

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Contact: Valerie Kor / Preqin

Debtwire Middle-Market

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Defaults are expected to face prolonged rise

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Source: Debtwire Par

Bubbling up: defaults continue year-long rise


Default rates have been increasing steadily month-on-month (MoM) from a low in February 2022 of only 0.4% to over 2% of the loan...

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Contact: Ben Watson / Debtwire 

April Update: Middle Market Deal Terms at a Glance

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Contact: Stefan Shaffer / SPP Capital Partners

Select Deals in the Market

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This publication is a service to our clients and friends. It is designed only to give general information on the market developments actually covered. It is not intended to be a comprehensive summary of recent developments or to suggest parameters for any prospective financing opportunity.