Cloud 9fin What makes the middle market?
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Dec 3, 2025 Matt Harvey, Executive Managing Director at PGIM Private Capital, shares his expertise in middle-market direct lending with over two decades of experience. He discusses the evolving definition of the middle market and points out the challenges facing borrowers and lenders. Matt explains the factors behind recent price compression and contrasts today’s underwriting standards with the high-yield 'golden vintage.' He also highlights the opportunities in non-sponsor lending, especially with family-owned companies, while addressing retail access issues in private credit.
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PGIM's Middle Market Definition
- PGM defines middle market as companies with roughly $20–75m EBITDA that need private, bilateral leveraged lending.
- These firms are large enough for professional management but too small for efficient public capital access.
Why Yields Have Compressed
- Recent yield moves reflected easing risk-free rates and tighter risk premiums driven by supply-demand imbalances.
- Despite compression, Matt Harvey argues senior‑secured private credit still offers attractive incremental returns vs liquid credit.
Golden Vintage Was Anomaly
- The 2022–23 'golden vintage' with high base rates plus wide spreads was anomalous and unlikely to reoccur.
- Current underwriting tends to produce more resilient capital structures, reducing the odds that outsized spreads are justified by future losses.