BNP Paribas’ Laleh Bashirrad Discusses the Mood of the Leveraged Loan Market
Mar 19, 2024
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Topics discussed include the mood of the market, M&A pipeline, LBO market, rivalry between private credit and broadly syndicated loans, positive shift in leveraged loan market, rise in M&A activity in Europe, stability in credit, financing availability, Silicon Valley bank collapse impact and future economic concerns, financial court proceedings, bankruptcy court proceedings, legal disputes in Chapter 11 cases.
Market sentiment is positive, driving expectations of increased M&A activity and long-term commitment by private credit firms.
Competition between private credit and broadly syndicated markets affects deal financing, with a trend towards 'hybrid deals' for optimized executions.
Deep dives
Market Outlook and Mergers & Acquisitions Prediction
The market mood has significantly improved with more risk-on outlook by investors, leading to expectations of increased M&A activity. Recent large deals like the United Rental acquisition showcase the revived M&A pipeline. Private credit firms are actively supporting M&A, allowing for long-term commitments and stabilizing the credit outlook for both public and private transactions.
Leveraged Buyout Market and Financing Trends
The LBO market is experiencing a resurgence with available financing options from broadly syndicated loans to private credit markets. Although financing structures may vary due to increased interest expenses, confidence in financing models is growing, potentially driving LBO activity. Preference for floating-rate versus fixed-rate debt depends on cash flows, confidence in rate decline outlook, and call protection trade-offs.
Competition Between Private Credit and Broadly Syndicated Market
A notable competition between private credit and broadly syndicated markets is evident in deal financing, with deals switching between sources based on pricing and terms. Issuers benefit from dual market demand but face value transfer challenges. Pricing convergence is observed, with variations in portfolios aiming for optimized executions, highlighting the trend of 'hybrid deals' blending private credit and traditional financing sources.
This week, Laleh Bashirrad, managing director of BNP Paribas’ leveraged syndicate desk, joins Reorg’s Katherine Schwartz to discuss the mood of the market, including the M&A pipeline, the LBO market and the ongoing rivalry between private credit and broadly syndicated loans.
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#leveragedfinance #highyield #restructuring #performingcredit #distresseddebt #debtrestructuring #leveragedloans
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