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Join leveraged finance reporter Ryan Daniel and senior private credit reporter Synne Johnsson as they dive into the resurgence of private credit strategies, blending nostalgia with innovation. They discuss the rise of hybrid deals and junior debt facilities, exploring how sponsors can maximize leverage through dual tranche structures. The conversation reveals the strategic advantages of private credit over syndicated markets and contemplates the future, linking current trends to lessons from past financial crises.
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Quick takeaways
- Private credit funds are revisiting hybrid deals to leverage both junior and senior debt amid a strong syndicated market.
- The podcast highlights challenges with Paripassu tranches in private credit, particularly regarding currency denomination and pricing risks.
Deep dives
Return to Roots in Private Credit
Private credit funds are increasingly returning to hybrid-style deals that combine elements of both junior and senior debt. This trend arises amidst a strong syndicated market, allowing sponsors to benefit from greater leverage and diversify their financing options. For example, companies like Idiolista are utilizing private credit to secure junior tranches in addition to senior bank debt, creating a dual-layer funding structure that maximally leverages their financial positions. This approach is especially advantageous for fast-growing companies that can effectively balance the costs of higher-interest junior debt against the benefits of added leverage.
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