They said it

“Scarce assets are more highly valued. The question is, as the era of greater selectivity unfolds, will there be enough to go around?”

Taken from Private Credit in an Age of Scarcity, the latest Lead Left newsletter from Randy Schwimmer of Churchill Asset Management.

First look

We cover all Europe’s key trends
Times are a-changing in Europe. The macroeconomic shocks of the past six months – the energy crisis, the inflation spike, rising interest rates and continued supply-chain disruption – are forcing private equity sponsors to re-evaluate their funding options.

“The syndicated loan market and the high-yield market are both effectively shut in Europe right now,” says Luke McDougall, co-chair of the global finance practice at law firm Paul Hastings.

“There are some limited circumstances in which someone would go to market, but generally speaking, as of early September, it is not a feasible option for leveraged buyouts.”

And yet it’s not all doom and gloom – far from it. The shifting landscape has thrown up a set of opportunities for European debt investors that make market participants quietly confident that growth will continue.

You can read all about the region’s shifting trends – including country-focused analyses of all the key markets – in our Europe Report 2022.

London event beckons – time to network with peers
Talking of Europe, we hope to see you tomorrow and Wednesday at our Europe Summit 2022 in London. With the macro trends shaking – but also in some ways assisting – the asset class, what better time to get industry leaders together to reflect on developments to date and fathom a way forward? The event features a typically strong agenda of interviews, panels, data presentations and interactive sessions. “A must for anyone in the industry,” says Luca Di Rico, head of European private capital at Racing Capital. We couldn’t put it better ourselves. See you there!

Private credit benefits as leveraged loan market fades
Three key points picked up on by fund manager Monroe Capital‘s Capital Markets Group in its latest market update: sizeable leveraged buyouts have favoured the private credit market this year given its flexibility and certainty of execution; deals are continuing to see enhanced pricing and favourable documentation terms in a lender-friendly market; and private credit funds continue to provide a natural hedge to rising interest rates with their floating-rate structures.

The update notes that institutional issuance in the leveraged loan market hit its lowest level in the third quarter of this year since the global financial crisis. Through to the end of September, issuance was $191.6 billion, compared with $485.7 billion in the same period of last year.

Essentials

Senior hire at CIFC
CIFC Asset Management, an alternative credit specialist with $40 billion in assets under management, has appointed T. Michael Johnson as a managing director and global co-head of business development.

Johnson will seek to deepen CIFC’s relationships with current and prospective clients as well as lead capital formation efforts across its multi-strategy credit platform alongside James Boothby and Joshua Hughes, the firm’s existing global co-heads of business development.

Johnson has nearly 20 years’ experience in alternative investment sales and most recently served as a managing director and head of investor relations at Carlyle Global Credit.

Golden recruit for AlbaCore
London-based credit specialist AlbaCore Capital Group has announced the appointment of Seán Golden. Upon joining in December, Golden will be responsible for helping build and lead AlbaCore’s investment capabilities in structured credit as a managing director and deputy portfolio manager.

“Structured credit investing is a natural extension of AlbaCore’s CLO management business that started in 2019,” said David Allen, managing partner and chief investment officer of AlbaCore.

Golden joins AlbaCore after nearly a decade at Alcentra, where he was most recently executive director of structured credit. In that capacity, he was responsible for analysing investments in structured products across Alcentra’s funds and execution trading. Previously, he was a member of the transaction management team covering structured credit.

LP watch

Institution: Texas Municipal Retirement System
Headquarters: Austin, US
AUM: $35.19 billion
Allocation to alternatives: 38.27%

Texas Municipal Retirement System has committed $250 million to Pemberton Strategic Credit Opportunities Fund III with an additional $50 million as a co-investment, according to materials from its board of trustees meeting earlier this month.

Pemberton Strategic Credit Opportunities Fund III is primarily focused on credit opportunities in Europe by providing junior capital to performing companies to enable expansion or acquisitions. This continues TMRS’s relationship with Pemberton Asset Management, with the pension having previously committed $250 million to the fund’s predecessor in August 2021.

TMRS’s recent commitments have tended to focus on funds that target the corporate sector, while having some investments in Europe.

Today’s letter was prepared by Andy Thomson with John Bakie, Christopher Faille and Robin Blumenthal