Q4 2019

Valuations & Opinions Group

Inside this Issue

Private equity backed portfolio company performance remains robust as market participants remain cautiously optimistic.

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Hold Size: Demand for First Lien & Unitranche Assets

With record levels of dry powder in the market, direct lending has been an attractive alternative to syndication deals for private credit, and greater amounts of capital have been committed upstream to higher quality assets; in Q4 2019, lenders demonstrated an aversion to senior debt positions less than $25.0 million in size in favor of larger investment holds

Security Pricing

All-in pricing generally decreased from the prior period, reflecting the continued decline of LIBOR; cash spreads have also continued to contract since 2018 Q4, yielding decreased total cash flows to floating rate instruments and further illustrating the competition in the middle market lending space

Average Loan Pricing by Security Type

Average Loan Pricing by Industry

Note: U.S. loans only, LIBOR and L Floor reflect weighted average while LIBOR above reflects the extend to which LIBOR is above the floor; all security types are included in the average loan pricing by industry

LIBOR Floor Requirements

Based on recent credit issuances, on average, LIBOR floor requirements are more relaxed for higher cash-generating and larger companies



Note: Based on 475+ new deals during CY 2019 including First Lien, Second Lien, and Unitranche Term Loans