Art Penn Featured on Bloomberg Markets: The Close
Art Penn discusses the lending opportunity in the core middle market with Vonnie Quinn and Sonali Basak of Bloomberg TV. Of note, Art looks back on a strong 2023 where yields rose to the low double digits for first-lien senior secured loans on the back of rising rates and a lender-friendly market environment. While default rates remain below long-term averages, Art notes that “as prudent credit selectors we underwrite looking at the downside case and hoping for the upside.” Art also looks forward to 2024 and he expects the core middle market to remain active and resilient as interest rates stabilize. He believes that credit quality will remain strong, especially for the high free cash flow service-oriented industries where PennantPark is focused.
Finally, Art compares the core middle market to the upper middle market and broadly syndicated loan market, which have become increasingly competitive and sacrificed certain lender protections in the process. “In the core middle market there is a lot less competition. We can structure lower leverage, we can structure better yields, we can structure covenants that have meaning.”