Benchmark prior transactions, bonds, loans or company profiles using over 300 credit metrics.

Comparables

AI transcripts & instant analysis, making earnings season easier than ever.

Earnings

A full suite of ESG data and analysis. Built for your workflow

Spot undervalued credits and potential future restructurings with our purpose-built tools.

Distressed and Restructuring

We use AI to aggregate newsflow from 2,000 sources, and deliver it to your inbox quicker than anyone else.

News

Full Financial profiles with 3 statements, KPIs, segment splits & credit metrics. All traced to source documents.

Financials

New deal analysis and covenant comparison tools, understand key risks in seconds not days.

Covenants

We've successfully predicted more than 65 price sensitive events - before they happened.

Deal predictions

Say goodbye to CTRL + F with our powerful search. Thousands of documents text searchable for any keyword or phrase.

Search

Track high yield deals from issuance through to maturity, with integrated legal, credit and ESG analysis.

High Yield Bonds

Shine a light on private markets with 9fin's news and legal analysis of syndicated loans

Leveraged Loans

21st century tech and expert analysis to help CLO teams make informed decisions faster.

Structured Credit 

Find information others can't see in one of the fastest growing corners of finance

Private Credit 

Shubham Saharan

Fresh off a historic Grammys and nearing an impending championship title for the Kansas City Chiefs (apologies to our readers who are 49ers fans), it seems only appropriate that our latest edition of this newsletter be Taylor Swift themed. Are you …Ready For It? 

BDC earnings season is upon us, with the ranks of public filers continuing to grow thanks to several listings in recent weeks.

Results came through from Oaktree Specialty Lending Corporation, Golub Capital BDC and the largest publicly traded BDC, Ares Capital Corporation.

Often seen as a bellwether for the broader market, Ares’ results give us a peek into what’s going on in private credit portfolios. 

For the most part, BDCs appear to be telling a similar story to previous quarters: interest coverage ratios have remained relatively steady, portfolio leverage is beginning to inch down, and amendment activity remains strong. 

But some cracks are starting to appear within portfolios. Liquidity is drying up and default rates which have so far defied economic gravity may be normalizing.

From ARCC’s CEO Kipp deVeer on their last earnings call: 

“In the bottom quartile of our portfolio, and probably everybody else's, you have some companies that are making interest payments but continue to live off of revolver ability, cash, etc, but the liquidity is getting tighter and tighter,” he said. “So my expectation is that defaults will go up this year, probably more towards the historical norm.”

We’ve been hearing for a few quarters now that defaults are expected to rise as companies grapple with higher interest rates. Still, there’s likely more pain to come as the rates remain at a heightened level (even with expected cuts).

Bad Blood between banks and private credit 

It’s been all over the headlines — banks are luring deals back from the private credit market. Here’s a few examples:

UK insurance broker Ardonagh launched a $2bn-equivalent cross-border syndicated deal alongside an expected $3bn private credit financing, after reports the company was in talks for a $5bn, all-private credit transaction

Auto repair chain Crash Champions priced a $1.3bn bond and loan package to refinance its private loan

Wood Mackenzie, an energy consultancy, is replacing its private credit debt with a $1.32bn loan led by Bank of America

Even Waupaca Foundry’s recent $360m term loan, which seemed ripe for direct lenders, instead opted for a BMO-led financing in the syndicated market

But as another famous musician David Byrne asked: how did we get here? 

For public markets, 2022 and parts of 2023 proved to be rough. An unprecedented number of interest rate increases, an inflation spike, a constant fear of recession, and geopolitical uncertainty led to depressed origination volumes in the broadly syndicated market. Private credit lenders were quick to swoop in during this time, offering certainty of execution and a mountain of deployable dry powder, albeit at a higher price point. 

Now, banks are back in business as a steep rally in credit markets enables them to pitch cheaper financing with looser covenants.

But private credit firms aren’t about to lose their recently earned market share so easily. Direct lenders are offering to shave 30bps-50bps from their existing loans to pre-empt refinancing proposals from banks, according to 9fin sources.

They’re also willing to back dividend recaps. One example of a recap was for Astatine Investment Partners-backed Big Truck Rental Company, which is looking to raise debt to refinance an existing subordinated debt facility and fund a distribution to shareholders.

Perhaps an enticing alternative for sponsors to a NAV loan?

Don’t Blame Me for doing another add-on 

Last year was arguably the year of the add-on. Nearly two-thirds of private credit firms’ deal activity in the last few quarters have come from add-on loans. It’s often the core of many private equity strategies, and in the absence of headline LBOs it has been a fruitful strategy for private credit firms.

It also makes a lot of sense for sponsors, as the necessity of holding onto assets for longer has meant focusing on growing their existing portfolio companies.

Private credit is built for such a model, in the sense that direct lenders can fund add-on loans much quicker to facilitate acquisitions compared with the longer lead times in syndicated markets.

It’s also a reliable way for lenders to boost origination volumes. After all, they know the companies, the due diligence is done and dusted, and it’s a good opportunity to deploy until the next wave of dealmaking comes along. 

To track the potential add-on financing activity, we’ve been documenting public records of M&A bolt-on activity and searching through public records within 9fin’s BDC database to find the existing holders of the buying company’s debt, and the potential financiers of any add-on loans. Take a look and tell us what you think!

The Unicrunch — A Swiftie take on BDCs, banks, and add-ons

‘tis the damn season for BDC earnings

Read all our public content for free

Recently Published

European CLO primary wrap — US election rush and ‘rehashing’ Opal conference themes

Winding Up — European economic news augurs rise in restructurings

European LevFin Wrap — Pipeline clouds gather after a sunny Q3

Taking the Credit — Moving on up

What are you waiting for?