At PennantPark, Art Penn says volatility turns investors’ attentions to middle-market CLOs
John S. Hintze – Asset Securitization Report
Middle market domestic companies, especially those owned by private-equity firms, face many of the same hurdles as their larger brethren, whether the tight labor market, supply chain snafus, inflation, interest-rate hikes, and the list goes on. However, their debt, often provided by a single lender or a small club, is arguably less volatile than much larger broadly syndicated loans (BSLs). And their more U.S.-centric businesses may be less impacted by financial and economic volatility, according to Art Penn, founder and managing partner of PennantPark and previously a top Wall Street executive at firms including Apollo Investment Management, UBS Warburg, and BT Alex. Brown (CQ).
PennantPark Investment Advisers is a direct lender and asset manager specializing in middle-market finance. The company started out in 2007 as a provider of second-lien debt and mezzanine finance. Eventually, PennantPark expanded to stressed and distressed debt as well as equity co-investments and senior debt. It has completed four collateralized debt obligations (CLOs) since 2019, securitizing primarily self-originated senior loans. Its $304 million PennantPark CLO IV closed earlier this year and has a four-year reinvestment period and 12-year final maturity.
Penn spoke to Asset Securitization Report about middle-market loans and the CLO markets and their performance since the start of the pandemic.