Benefit Street Partners’ Post

Thank you Torys LLP for sharing these insights from the 2024 Private Credit Industry Conference The articles identifies the following: Promising developments in the private credit market. New options in the loan market. Opportunities for private lenders. Documentation trends in the private credit market. #privatecredit #directlending #debt #capitalmarkets #finance #management #investing

🔒 Private Credit: A Hidden Gem for Investors 🔒 Private credit is gaining attention in the investment world, and there are good reasons to take notice. J.P. Morgan highlights four key factors that make private credit appealing: 1️⃣ Higher Yields: Direct lending offers a significant yield premium, compensating for lower liquidity with better returns. 2️⃣ Healthy Growth: The direct loan market is smaller than perceived, and it is taking market share from high yield and leveraged loans. 3️⃣ Strong Underwriting: Lending standards are strict, with less risky features compared to other loans, offering more protection for investors. 4️⃣ Resilient Fundamentals: Even with economic fluctuations, private credit shows stable fundamentals, indicating a solid ability of borrowers to handle debts. #PrivateCredit #InvestmentOpportunities #FinancialInsights #InvestmentStrategy

For those that missed it, the Alternative Credit Council produced their Financing the Economy 2023 report (attached). Few interesting points to note: - The largest lenders (deploying $10b+ per year) account for 57% of total capital deployed globally - Level of Interest rates is borrower's #1 concern - Given direct lending has historically not been heavily involved in cyclical sectors, so far, a relatively small number of portfolio companies are facing issues which requires loan term adjustments (covenant waivers, cash to PIK etc) or additional equity. PIK toggles have become more common - Emphasis on the relationship between borrower (and PE owner) and lender - Typically more equity in deals than pre GFC (closer to 50% vs 20-30% pre GFC) - Expectation that private credit will take more market share from banks and the syndicated loan market - Covenant protection has improved as the market has become more lender friendly - Leverage in private credit funds is relatively low

An interesting shift in the market as big name Private Equity firms move towards lower risk lending strategies. Will this mean the Banks will have to be more competetive? #PrivateEquity #PrivateDebt #PrivateCredit #CapitalMarkets #Management #MergersandAcqusitions #Finance #Competition https://lnkd.in/gHvJgd6H

https://lnkd.in/g9FTQEtz 👈 Welcome to the 26th part- Today we will discuss new product i.e. Working capital demand loan. The working capital demand loan is a very unique loan product offered by the banks to the customers for their working capital. It is usually given as a sub-limit of CC or OD. The operations and usage of the product is very unique along with lower interest cost which makes it a unique loan product to have. Today we shall discuss all details about this product and try to enhance our knowledger about different working capital loan products. We are building a course for credit managers where the required practical knowledge is imparted in a series of lectures in a very simple language so that everyone can understand. #workingcapitaldemandloan #demandloan #AnkushJain #overdraft #caankushjain #workingcapitalloans #workingcapital #creditanalyst #creditanalysis #creditmanager #financialanalysis

📌I recently came across a quote that truly struck a chord with me: "Lending is easy but getting your money back is hard." In my experience as a credit analyst, I’ve seen firsthand that while the act of extending credit can seem straightforward, the real challenge lies in ensuring that money returns as planned. My journey has taught me that effective lending goes far beyond the initial transaction. It's about deeply understanding your clients' financial situations, needs, navigating the economic landscape and continuously mitigating risks. What truly resonates with me is the idea that lending is more than just a financial transaction; It’s not just about disbursing funds but about creating a strong relationship that supports our clients' financial health and success. Ensuring that loans are repaid involves continuous support, careful monitoring, and a genuine commitment to seeing our clients thrive. Every day, I’m reminded that the heart of lending lies in these connections, where trust and commitment drive not just repayment, but shared success for both the lender and the borrower. #lending #finance #riskmanagement #relationships

ECONOMIC REPORTS EXPECTED, MONDAY, FEBRUARY 5, 2024 ✓ All reports now posted on my LinkedIn profile page • 9:45 AM Est -- S&P FINAL U.S. SERVICES PMI, January 2024 ✓ Now posted on my LinkedIn profile page • 10:00 AM Est -- ISM SERVICES PMI, January 2024 ✓ Now posted on my LinkedIn profile page • SENIOR LOAN OFFICER SURVEY, On Bank Lending Practices, January 2024 ✓ Now posted on my LinkedIn profile page #economicreportsmondayjan5

𝗨𝗻𝗹𝗼𝗰𝗸𝗶𝗻𝗴 𝘁𝗵𝗲 𝟱 𝗸𝗲𝘆 𝗕𝗲𝗻𝗲𝗳𝗶𝘁𝘀 𝗼𝗳 𝗣𝗮𝘀𝘀𝗶𝘃𝗲 𝗟𝗲𝗻𝗱𝗶𝗻𝗴 𝗨𝗻𝗱𝗲𝗿 𝗔𝗱𝗺𝗶𝗻𝗶𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻: By investing through a loan administrator, you may achieve these advantages: 𝗥𝗶𝘀𝗸 𝗠𝗶𝘁𝗶𝗴𝗮𝘁𝗶𝗼𝗻: by entrusting the administration to experts, you may reduce risk and ensure compliance with protecting your investments. 𝗧𝗶𝗺𝗲 𝗦𝗮𝘃𝗶𝗻𝗴𝘀: enjoy the freedom to focus on your career and lifestlye activities while the loan administrator handles the day-to-day management. 𝗗𝗶𝘃𝗲𝗿𝘀𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻: spread your investments across a range of loans and projects, minimizing concentration risk and increasing your portfolio's resilience. 𝗣𝗿𝗼𝗳𝗲𝘀𝘀𝗶𝗼𝗻𝗮𝗹 𝗘𝘅𝗽𝗲𝗿𝘁𝗶𝘀𝗲: benefit from the knowledge and experience of professionals who specialize in the lending industry to make informed decisions. 𝗣𝗲𝗮𝗰𝗲 𝗼𝗳 𝗠𝗶𝗻𝗱: passive lending through an administrator provides peace of mind, knowing your investments are in capable hands. Your financial future deserves the best, and passive lending through a loan administrator might be the key to achieving your investment goals. #Core #PrivateLending #InvestmentStrategies

What makes a “good” private credit manager? As investors are increasing their allocation to the asset class, a recent AFR article about private credit not all being the same raised some good points about better understanding the sector. When Scarcity Partners assesses a private credit manager as a possible equity partner in the business, these are some capabilities we look at: 1. Origination - The breadth of relationships a private credit manager cultivates allows them to expand their pool of potential opportunities. With more opportunities from which to screen, the manager can select the deals that are most advantageous for its investors. 2. Selection – One of the primary objectives of a private credit manager is avoiding defaults. The manager must be able to gain comfort the potential borrower will be able to repay its obligations through different market environments. This requires the manager to understand the nuances of different sectors, various macro forces and a variety of business models in order to select only the opportunities that will deliver for investors. 3. Risk management – The private credit manager’s job is not finished with the writing of the loan. Ongoing risk management is required to ensure the borrower is performing as market dynamics change or, if the borrower struggles, take steps to protect investors’ interests. Regardless of loan size, the amount of leverage and the strength of the convents put in place as part of the loan dictate the outcomes for investors. For Scarcity Partners, these three attributes provide an indication of the fund manager’s expertise and therefore the likelihood it would be a good business in which to invest. #privateequity #gpstaking #privatecredit

The links between the Equity/Option markets and Bank Loans/Private Credit are succinctly delineated in this story. Merton must be proud and smiling. It's amazing how many times I've seen asset allocation studies fail to reflect these basic correlations. Corporate Finance 101.