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Navigating the Golden Age of Private Credit: Part 3
May 30, 2024
Guest Lyle Margolis from Fitch Ratings discusses rising borrowing costs impacting portfolio ratings, Fed cuts pricing, default trends in high yield bond market, sector trends, ARR loans for software companies, and private credit market recovery rates and dynamics.
40:51
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Quick takeaways
- Stable leverage in middle market companies driven by strong earnings, despite challenges from rising interest rates and liquidity pressures.
- Default rates in privately monitored rating portfolio increasing with severe defaults, companies resorting to pick interest and loan amendments for liquidity, affecting recovery rates.
Deep dives
Economic Outlook and Middle Market Fundamentals
Strong earnings in the middle market have led to stable leverage, benefiting from increased revenue and EBITDA. Earnings are expected to improve amidst stable leverage ratios, despite rising interest rates posing challenges to coverage and liquidity. Companies are experiencing pressure on free cash flow, leading to struggles in meeting interest payments and seeking relief from lenders.
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Discover
highlights
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