Private Capital Call

This week we’ve been doing bedchecks on our friends in the #CreditMarkets. We caught up with one long-time practitioner, hanging out in the home office with family in “bathrobes and bunny slippers.”

“The capital markets went from price perfection to price combustion,” he told us. “There’s a lot going on behind the scenes, nothing in the market.”...

Back on January 8th, we reviewed credit market conditions in the wake of the killing of an Iranian general. Could this be the exogenous factor that sparks a Middle East war, and triggers a recession?

We concluded with the following observation: “Whether the Fed can continue mainlining enough liquidity all year to overcome any exogenous risks – bubbles or stickier stuff – remains to be seen.”...

Private credit assets don’t trade. That distinguishes them from more volatile public credit correlated with market moves. Middle market loan yields are therefore more stable through business cycles...

This idea comes from the prevalence of record high borrower leverage and cov-lite structures. If performance deteriorates, lenders have no triggers until a payment default...

Private sub debt regularly gets kicked around at conferences for being “dead.” Particularly with the advent of unitranche financings...

For issuers one of the virtues of private credit is being available when public markets aren’t available. Buy-and-hold private credit managers have locked-in capacity. Since the assets are not liquid, transactions can be structured with long hold periods and without relying a market take-out.

It’s a myth that’s applied regularly to leverage loans. The universe of broadly syndicated loans is as large as that of high-yield bonds, so that must be a bad thing...

According to the World Happiness Report, Finland topped a list of 156 countries. The US was 19th, and South Sudan as the least cheerful place to live...

A Dartmouth College professor has found that middle age is even more depressing than we thought. But things start looking up pretty quickly after that.  

In a recently published study, David Blanchflower found unhappiness is a U-shaped curve, bottoming out when people are 47.2 years old.   

But after that, people start feeling better. By the time they hit their 60’s, they’re as chipper as they were in their 20’s. Or maybe they just forget how miserable they are.  

Investor happiness is a topic we’re studying: How do investors feel today about #PrivateCredit, and has that changed over time?  

The economic story has certainly changed. Worries about a recession have been , replaced by strong corporate earnings and public equity indices at record highs...

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Remember your summer internships in high school? Neither do we.   

Wolf Cukier’s stint at NASA’s Goddard Space Flight Center last summer could have been equally forgetful. The Scarsdale, NY teenager began it by searching for anomalous star patterns amid reams of satellite data.  

 On his third day he noted an odd image near a binary star system. It turned out to be a planet, now labeled TOI 1338 b. Of his discovery, Wolf said: “It definitely colored the rest of the internship.”  

Observers are scanning for similar signs of life in the leveraged loan universe. As our Chart of the Week shows 2019 volume slumped 35%, from $1.2 trillion to $808 billion, according to Refinitiv LPC .  

In part, this is attributable to the natural ebb-and-flow of financings. It’s also rate-driven, as refinancings have fallen off with the bottoming of interest rates...   

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