We've successfully predicted more than 40 price sensitive events - before they happened.

Deal predictions

A one-stop shop for all your restructuring needs 

Distressed and Restructuring

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

Earnings

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

Comparables

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

Covenants

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

News

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

Search

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

Financials

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

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

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

Private Credit 

Unlock new business with the most impactful CLO market content married with elegant data analysis tools.

Structured Credit 

David Brooke

This article is part of our new service, 9fin Private Credit. If you're interested in a free trial, contact subscriptions@9fin.com.

Spend enough time in credit, and the same names (and assorted dramas that go with them) come around again and again, like one long Scooby Doo cartoon. 

Case in point: Citrix, the cause of many sleepless nights for bankers throughout 2022, returned to the broadly syndicated market this week for a $1bn add-on loan to repay some preferred equity. In the space of a one-day syndication, the deal both triggered memories of last year’s hung debt debacle and showed how much things have changed since then.

The reaction of one source, who we caught mid-travel and thus was out of the loop on the day’s new issuance, summed it up when we described the transaction: “Really?! That’s f***king awesome, I love this industry.”

Of course 2022 was a happier time for direct lenders. When the bank market shut down it was no longer private credit just taking the banks’ lunch, but their breakfast and dinner too! Late last year, private credit managers were even joking about taking 100% market share.

But conditions are different now, and when dealflow is more limited in a tricky macro environment, origination is about repetition as much as it is about expansion. Familiarity is your friend when it comes to lenders (and lawyers!) earning repeat business when sponsors take advantage of add-ons and delayed draw facilities after an LBO.

American Equipment Holdings will be an interesting situation to follow, with that in mind. As 9fin reported earlier this week, the company is on the block after more than two years in the hands of private equity firm Rotunda Capital Partners. Over that time, the crane and hoist services provider made 14 acquisitions as of January this year with the backing of direct lenders Kayne Anderson and Twin Brook.

Of course, a big risk for direct lenders is if the sponsor decides to lean on the bank market to refinance a prized asset, if it has grown large enough. 

But that pivot to syndicated debt is no longer as obvious as it used to be. Now that the largest funds can rival the size of bank deals — without the flex risk — the private credit market has much greater capacity to fund companies for longer. Given the volatility in broadly syndicated debt in recent months, owners may be inclined to go with the devil they know. 

Another case in point: Goldman Sachs BDC’s third quarter earnings call last week revealed the lender had backed a deal for Rubrik, a data security cyber company, to refinance debt and provide funding for the company’s acquisition of Israel-headquartered Laminar Securities. The spread has remained the same at SOFR+700bps, but maturity has now been pushed out to 2028, according to filings. 

Sometimes there’s a benefit to staying in the game a little longer, as NBA veteran and Rubrik investor Kevin Durant would no doubt testify. As well as benefiting from being rolled into the next deal, re-underwriting the credit is a little easier when the sponsor remains the same.

There was another similar situation last week as Blackstone Credit continued its backing of Guidehouse, a business consultancy firm, as it was sold by Veritas Capital to Bain Capital for $5.3bn. A $2.85bn debt package that was put in place in 2021 and led by the lending behemoth remained in place.

So bigger is perhaps better, which is the direction the private credit market is heading in as some of the giants of the game account for a growing majority of deals. Estimates from the trade body AIMA said there has been $333bn in deal volume last year, globally, of which 58% was provided by those lenders who invest more than $10bn per year, on average.

Very few private credit firms reach the $10bn level of dealmaking. To deploy that level of cash, those firms are increasingly investing in companies at the larger end of the middle market, typically defined as companies generating more than $75m EBITDA per year, as well as bigger assets that previously might have been reserved for the banks, such as Finastra or New Relic. 

Others, however, have stuck to their knitting by raising modest funds and providing loans to companies with EBITDA below the $75m mark. While bigger deals often grab more headlines, it is the likes of American Equipment ($37m EBITDA) or Fenix Parts ($40m-$50m EBITDA) that have historically made up the backbone of private credit activity.

So, does that 58% figure point to a widening gap between the largest and smallest asset managers?

The gap may increase as companies deal with the fallout of high interest rates. Larger firms have the resources to tackle difficult credits with restructuring experts — while also staying on the offensive with big origination teams. Those further down the ladder with fewer resources to deal with defaults may feel more pain from “higher for longer”.

Still, it hasn’t halted lenders large and small from hitting the fundraising trail. The cash raising juggernaut Blackstone reached $8bn on a first close for its latest direct lending fund, Bloomberg reported, while at the other end of the market Benefit Street Partners is aiming to close on $2.5bn for its fifth direct lending fund.

The Unicrunch — Monopoly money

Jumping through hoops

Read all our public content for free

Recently Published

Taking the Credit — Opportunities are slender with an incumbent lender

European LevFin Wrap — Dash for divis but no sight of Synlab

Friday Workout — Glide paths; sending out a distress Signa(l)

Excess Spread — Switched on, feeding the beast, senior year

What are you waiting for?

Cookies & Privacy