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Historical And Forecast Loan Data
A major segment of the credit market - secured loans - still has to show the kind of comparable primary issuance pick up that has been witnessed in equities and riskier high-yield debt. Primary loan volumes are still running at half of the comparable 2008 period, particularly in the middle-market.
A recent poll by Thomson Reuters' Loan Pricing Corporation demonstrates that the outlook for this key credit product is still very murky, especially with an onslaught in secured maturities in the 2011-2014 timeframe. Another concern is that the majority of non-bank investors still demand a 9.5-10.5% return on loan investments.
With LIBOR at unprecedented low rates, this means the spreads on new deals will be record, implying 1st liens will soon demonstrate spreads that previously were expected from 2nd and lower-lien deals, and that every new deal will likely have a very significant LIBOR floor, making the BBA LIBOR quoting essentially irrelevant as a metric of credit market "health."
This and much more in the presentation below.
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You are right on with this article. We do hard money secured loans. Our minimum is 9.5% for non real estate loans up to 12% for real estate (although we have not place on loan in over a yeat).
I'm surprised it's that low. At the shop I work at we wont do anything below L+1000 current (with floor at 300), and we usually get significant PIK and/or warrants too. Low end of the middle market and direct originations without syndication, but still, target IRR's in the 20-30% range seem to be more of what I am seeing. And to get L+1000 w/o warrants, it has to be the sr. secured tranche and generally less than 2.0x EBITDA.
Yeah. I've seen value funds that usually focus on equity investments looking for 12-15%.
Knock, kncok...
Fed: who is there?
Guest: Deflation, damn it.
Am I at Zero Hedge? What's this PIK, LIBOR, IRR, Secured loans nonsense? Where are all the anti-Obama comments, the Limbaugh references, town-hall outrage? I guess less than 10 comments is the new Captcha.
What are you talking about? don't group this blog or any reasonable discussion on this site with those nuts.