Carlyle BDC sees increased LBO opportunities

Activity in 2017 has been driven by repricing, but the firm saw more opportunities in increased LBO activity in the second quarter.

Carlyle BDC’s total investments reached $1.7 billion after the firm saw an uptick in buyout activity in the second quarter.

Approximately $400 million of loans originated by the platform were made during the last quarter and a further $200 million was issued via the firm’s joint venture with a Canadian pension fund.

The weighted average yield of the portfolio across the quarter was 8.6 percent, up from 8.3 percent in first quarter, although this was partly attributed to a rise in the Libor rate.

It was the first earnings report issued by BDC since its initial public offering in June. It issued 9m shares valued at $18.50 each. A dividend of $0.37 per share is to be paid out on 18 October.

“The leverage finance market continues to be extremely robust during the second quarter with significant new volume. Spreads remain tight and leveraged is high, while purchase prices continue to be at near all-time peaks,” said Jeff Levin, president of TCG BDC.

Repricings drove the majority of the activity in the first half of the year, but the recent quarter saw an increase in the number of leveraged buyouts, executives said on the call. “Repricings ebbed a bit more LBO acquisitions increased, which is much more in our sweet spot,” said Levin.

The firm made a total of 30 commitments with 99 percent first lien senior secured floating rate loans. These were made to technology, telecommunication, insurance brokerages and healthcare companies.

The Carlyle Group BDC targets investments in companies with an EBTIDA ranging between $10 million and $100 million. As of 30 June, 63.5 percent of its investments were in first lien debt, 10 percent in first lien last out, 14 percent in second lien and just 11 percent included other instruments such as mezzanine and equity financing.