Private Debt Seen Succumbing to Junk Frenzy as Yields Evaporate
By Kelsey Butler – Bloomberg
PennantPark Founder and Managing Partner Art Penn spoke with Kelsey Butler of Bloomberg for her piece on how borrower-friendly terms in the junk-bond and leveraged loan markets are impacting the upper middle market for private debt. The core middle market, where we are focused, has not seen that type of pressure. “We want to focus on an area where we are not competing with the broadly syndicated loan or high-yield markets, which have fully bounced back to pre-Covid levels with high leverage, low yields, many Ebitda adjustments, and no or wide covenants,” Art said. Art also noted that middle market direct lenders should expect higher volume in the coming year.
The following story appeared on the Bloomberg Terminal:
Default risk rose in Europe for investment-grade corporate bonds for the first time in three days, though the gauge remains lower over the week.
- There were five deals in the primary market on Friday with Iceland Foods expected to price its 250 million sterling offering
- Orsted, Rallye and Travelex were all out with tender offers
- Firms seeking to avoid a wall of debt coming due while the pandemic continues to threaten revenues are reordering balance sheets to push maturities into the future
Weekly dollar bond sales in Asia excluding Japan fell to the lowest this year, with many markets closing for the start of Lunar New Year holidays