NEW YORK, December 3, 2015 – One of the enduring fictions about middle market loans relates to their tradability. Smaller loans, the theory goes, are priced at a premium because there are fewer ready buyers. Unlike their broadly syndicated cousins, loans below $250 million have no effective secondary market. That’s the idea, anyway.
NEW YORK, November 5, 2015 – These days it’s popular sport at loan conferences to kick the mezzanine asset class. After the credit crisis, when some investors in subordinated debt took a licking, the common question heard among market players was: “Is mezz dead?” Today the refrain is: “Is mezz still dead?” And yet, in conversations with practitioners, it seems mezz is alive and well.
NEW YORK, October 8, 2015 – When your correspondent began distributing middle market loans (in the waning days of the Reagan administration), the concept was considered novel. Back then money-centre banks underwrote and syndicated mainly large corporate loans to other relationship banks. Smaller deals were mostly self-arranged, club affairs among regional banks and finance companies.
NEW YORK, August 6, 2015 – It’s a perennial source of angst for loan buyers that target private equity-backed companies: how do you analyse transactions that finance a distribution to the sponsor by taking invested cash out of the company?
NEW YORK, July 9, 2015 – The untimely passing last month of Jimmy Lee, JP Morgan Chase’s vice-chairman, at the age of 62, left many in the banking world reflecting on the legacy of a man who changed the face of buy-out finance. But it gave us the opportunity as well to consider the state of the industry he leaves behind.
NEW YORK, June 11, 2015 – It’s been called the most mispriced security on Wall Street. It’s also the least-known casualty of bank regulatory reform. Welcome to the revolving credit facility.TIAA- CREF).
NEW YORK, May 7, 2015 – Leveraged lending guidelines have set six times total leverage as the limit above which a loan would likely be criticised by examiners. Less noted by the media, but of growing interest to market players, are the components of leverage metrics: specifically, how the numerator (debt) and the denominator (earnings) are being massaged to put the best face on increasingly leveraged transactions.
NEW YORK, April 2, 2015 – We’re seeing a rush to pound out new publicly-traded (and private) business development companies, with many launched and more lined up in registration. Managers have correctly identified the virtues of BDCs: one-to-one fund leverage, tax advantages for investors, access to permanent capital, double-digit return potential, the fact that banks can own them under Dodd-Frank… Need we go on?
NEW YORK, March 5, 2015 – One tenet of sound lending practices is establishing the borrower’s capacity to repay its debt over the contractual life of the obligation. So it’s not surprising that regulators have taken banks to task in recent reports highlighting a growing number of leveraged loan issuers which lack that capacity.