Red, White, and Expensive – higher interest rates and lower leverage continued to keep deal volume down in H1 2023. With SOFR expected to stay above 5% for months to come, fireworks may be muted this July 4th but we’re seeing some sparks on the horizon.
- Direct lenders are hyper-selective and increasingly conservative, offering lower leverage (down ~20% from peak 2021 levels) and higher spreads (100-150 basis points wider vs. 2021) while maintaining OIDs of at least 2% (but often as high as 3%)
- Investors are rebalancing portfolios toward recession-resistant sectors while continuing to shy away from consumer discretionary deals
- Diligence processes continue to elongate, with more third-party work than ever and closer attention to covenant packages
- Public market sentiment shows hopes for a soft landing for the US economy, with new issuance volumes recently rebounding
Connect with Our Team
- Jonathan Zucker, Managing Director, Head of Capital Advisory, jzucker@IntrepidIB.com
- Boris Zikratov, Director, Capital Advisory, bzikratov@IntrepidIB.com
- Stephen Senior, Associate, Capital Advisory, ssenior@IntrepidIB.com