Ciarán Flynn’s Post

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