Principal Asset Management’s Post

For those investors searching for alternative sources of income...take a look to middle market direct lending. There are several ways to customize the strategy to your needs.

As we reach the midpoint of 2024, the demand for convenient lending products is at an all-time high. However, interest rates are likely to remain higher for longer, meaning lender’s capital costs, and therefore, net interest margins will continue to be squeezed. This raises a critical question: How can lenders sustainably and profitably meet the increasing demand for loans? Drawing on our firsthand experiences working with market-leading lenders on the front lines and expert advice from Andreessen Horowitz's Seema Amble, we have identified four key underwriting strategies to help you optimize the crucial balance between risk and return. Check out this link to deep dive into these insights 👇 https://lnkd.in/eHK-b2Gp

Financial institution loan yields have struggled to keep pace with the rapid rise in managed and market rates. Deposit costs continue to increase, squeezing net interest margins. Leveraging a disciplined relationship pricing model can support institutional profitability in this tough interest rate environment. FORVIS provides more insight here.

Floating rate investments have become a more attractive product in the current rate environment, and floating rate CLO debt as well as the underlying collateral consisting of broadly syndicated loans are both currently in demand. However, this strong bid from CLO issuance has contributed to an elevated bank loan price environment, increasing the difficulty of finding relative value in the current market. Read more from our collateralized loan obligations portfolio management team in our recent Quarterly Insights, Chris Kappas, Daniel Green, and Michael Sterne, https://bit.ly/4fpFPpZ

Financial institution loan yields have struggled to keep pace with the rapid rise in managed and market rates. Deposit costs continue to increase, squeezing net interest margins. Leveraging a disciplined relationship pricing model can support institutional profitability in this tough interest rate environment. FORVIS provides more insight here.

AWMS’ Chart of the Month shows that loans as a percentage of total bank assets have declined by 22% since 1985 – and now represent only 50% of the balance sheet on average. This has been driven by a meaningful decline in commercial loans made by traditional banks over the last 40 years. As large banks continue to shift their focus on securitization, nonbank entities in the private markets are stepping in to fill the pent-up demand. For direct lending investors, this tailwind is expected to continue. Financial advisors, learn more about the roles of private credit, private equity and private real assets in a portfolio at AccessAres.com.

Private credit continues to draw strong client interest as an income alternative. Advisors: hear David Santoriello, CFA, CAIA discuss how you can approach an allocation to direct lending, including what characteristics to look for when selecting a manager. Register here on RIA Channel: https://okt.to/vaQuj5 #privatecredit #privatewealth #middlemarket

Banks Say No, We Say Go! 💸🏁 While others slam the brakes, we're accelerating lending. As your boutique direct hard money lending firm, we bridge the gap left by regional banks in this high-rate environment. We see opportunities where others see risk. When others wont, we can. We prioritize clear exit strategies for every project, setting you up for long-term success. As private lending has become more conventional than ever, with regional banks withdrawing or tightening credit, choose someone who wants to be a financial partner to face modern real estate challenges WITH YOU. ⏩ https://lnkd.in/gvdRKaji

Private credit continues to draw strong client interest as an income alternative. Advisors: hear David Santoriello, CFA, CAIA discuss how you can approach an allocation to direct lending, including what characteristics to look for when selecting a manager. Register here on RIA Channel: https://okt.to/j8NTmV #privatecredit #privatewealth #middlemarket

🔍💡In an ever-evolving financial world, hard money lending stands strong despite rising interest rates. Our newest article unpacks this resilience, showcasing how the quick, flexible financing solutions provided by hard money loans remain a top choice for real estate investors. Dive into the reasons behind this steadfast demand—from the swift pivot of investors' needs to the more cautious approaches of traditional banks. Hard money lending isn't just surviving; it's thriving, meeting today's market with adaptability and strength. ✨ Read more here: https://zurl.co/SSpV