January 27, 2022

Volume XII, Number 27

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Second Annual Survey on Trends in Private Credit Markets

Proskauer released results from The Private Credit Group’s market survey for 2018. The comprehensive survey features the predictions of top lending institutions, which complement the findings of Proskauer’s proprietary deal data report that was released earlier this year. Together, the analysis of the private credit deal terms alongside the survey, provides clients with a unique and in-depth look into the state of the credit markets and forecasts for the remainder of the year.

Key highlights from the report include:

  • UK and U.S. interest rates are widely expected to increase, though there is less certainty around the Eurozone
  • Respondents are generally optimistic about the year ahead; 88% expect deal activity to stay the same or increase
  • Dry powder levels are considered the most important driver of deal flow overall
  • Competition is the greatest challenge for dealmakers overall, with high transaction multiples slightly more concerning for respondents from the UK and Europe
  • Business Services, Healthcare, Software and Technology, Manufacturing and Transport and logistics are being targeted for investment by ¾ of respondents, with Software and Technology experiencing significant year-on-year growth in the US
  • 2/3 of respondents are currently raising a debt fund and 78% plan to fundraise over the next 12 months

In this report, we will share respondents’ views on deal flow for the year ahead, drivers of deal volume and the challenges facing dealmakers. Respondents also gave us their market predictions for 2018, and expectations for pricing, defaults and interest rates. Looking more broadly at economic and political factors affecting the market, we captured respondents’ thoughts on GDP growth and the impact of US Tax Reform and the European Leveraged Lending Guidelines on deal flow, financing and appetite for investment. 

Looking more broadly at economic and political factors affecting the market, we captured respondents’ thoughts on GDP growth and the impact of US Tax Reform and the European Leveraged Lending Guidelines on deal flow, financing and appetite for investment. Taking those market predictions into consideration, we then looked at respondents’ investment strategies, including:

  • Hot markets for investment
  • Most commonly used lending vehicles
  • Plans to fundraise and plans to purchase a loan portfolio Finally, we will present respondents’ feedback on the conditions and controls which govern investments, such as:
    • The equity required on transactions
    • Use of financial covenants
    • The maximum leverage underwritten
    • The most important risks to lenders

Please click here to access the full report.

© 2022 Proskauer Rose LLP. National Law Review, Volume VIII, Number 111
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About this Author

Steven Ellis, Lawyer, Corporate, Restructuring, Boston, MA, Proskauer Rose Law FIrm
Partner

Steven M. Ellis is a partner in the Corporate Department, co-head of The Private Credit Group and a member of the Executive Committee.

Steve concentrates in middle-market and upper-market financing transactions and restructuring matters. With one of the largest client rosters in the industry, he represents an array of secured lenders, second lien lenders, debt funds and private equity funds in all types of transactions from recapitalizations to acquisitions. He specializes in private credit financing transactions, including innovative, first-in-...

sellis@proskauer.com
Stephen Boyko, Proskauer Rose Law Firm, Attorney, Corporate and Finance, Boston, New York
Partner

Stephen A. Boyko is a partner in the Corporate Department and co-head of The Private Credit and Finance Groups. 

Steve’s primary focus is in finance transactions, particularly those involving private sources of capital. He represents one of the largest client rosters in the industry, including an array of specialty finance companies, private debt funds, business development companies (BDCs), CLOs, sovereign wealth funds, insurance companies, hedge funds, private equity investors and issuers in connection with leveraged buyouts, growth capital...

617.526.9770
Peter J. Antoszyk, Attorney, Corporate, Finance, Boston, MA, Proskauer Rose Law Firm
Partner

Peter J. Antoszyk is a partner in the Corporate Department and a member of The Private Credit and Business Solutions, Governance, Restructuring & Bankruptcy Groups.

Peter represents more than 50 private credit funds, asset managers, sovereign wealth funds, BDCs, insurance companies, hedge funds, finance companies, SBICs and other direct credit funds on arranged, syndicated and “club” private credit transactions ranging from $15 million to $1 billion. Peter has extensive experience with sponsor and strategic acquisition financing, dividend...

617.526.9749
Gary Creem, Corporate Attorney, Proskauer Rose Law Firm, Boston, Massachusetts
Partner

Gary Creem is a Corporate partner and member of The Private Credit and Finance Groups.

Gary focuses his practice on complex corporate finance transactions, including leveraged sponsor buyouts, acquisition financings and recapitalization transactions. Gary routinely represents an array of leading institutional investors in direct, club and syndicated financing transactions in the middle market and upper middle market, often involving cross-border components. His clients include leading investment banks, institutional investors, private debt funds...

617.526.9637
Sandra Lee Montgomery, Corporate Attorney, Los Angeles, Proskauer Rose Law Firm
Partner

Sandra is a partner in the Corporate Department and a member of The Private Credit and Finance Groups. Sandra represents first- and second-lien senior lenders, mezzanine investors, and equity sponsors in senior debt, mezzanine and private equity financing arrangements, particularly those involving private sources of capital. Her areas of focus include:

  • acquisitions
  • recapitalization and other leveraged financings
  • cash flow and asset-based financings
  • debtor-in-possession and exit financings
  • cross-border financings
  • unitranche and...
310.284.4573
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