Loan Note: Bond issuance buoyant in 2021; Real estate deal volume rebounds

Bond issuance remains solid despite expectations of a major contraction. Also: real estate deals have rebounded strongly in the second quarter and Star Mountain hires a former Barings executive.

They said it

“It feels like we’re in the early innings of a new credit cycle.”

Lauren Basmadjian, co-head of liquid credit and head of US loans and structured credit at Carlyle.

First look

Global bond issuance remains solid despite expected contraction
Issuance of bonds worldwide is expected to contract roughly 1 percent this year, according to a recent S&P Global Ratings Research report. Yet despite the expected decline, second-quarter issuance remained in a solid position, with most sectors showing growth from the first half of 2020.

“The high aggregate issuance total from 2020 remains hard to beat, though the 2021 total should still be historically high, likely surpassing 2019 by a wide margin,” said Nick Kraemer, head of S&P Global Ratings Performance Analytics, in a release.

The year 2020 “saw a breakout total for rated issuance from non-financial corporates issuers, with $1.1 trillion in Q2 alone”, Kraemer told Private Debt Investor. “Most of the unusual growth came from US investment grade spectrum following the Fed introduction of their liquidity facilities in late March,” he said, adding that the US Federal Reserve also supported a strong first quarter.

In the first half of 2021, total issuance was $4.5 trillion, down 3.2 percent from the like period last year, according to the report. Overall, global structured finance was the leading sector rising 16 percent, followed by global financial services and US public finance.

Even with last year’s “unusually high issuance”, the S&P Global report said, “the full-year 2021 total will likely finish strong despite a decline”.

Real estate deal volume rebounds in the second quarter
The volume of commercial real estate deals in the US shot up in the second quarter of 2021 to pre-pandemic levels, signalling a shift to perhaps a new expansion, according to a recent Real Capital Analytics report.

Although deal volume in the industrial sector declined in the first quarter of 2021, volume in the second quarter spiked by triple digits compared to other sectors. Industrials rose 67 percent above the average seen in all second quarters from 2015-19, the research outfit reported.

Deals in the apartment sector continue to thrive and remains the largest, with the sector seeing 40 percent growth from its average pace before the pandemic. The firm attributed the outperformance last quarter to sales of garden apartments in non-major metro areas.

Essentials

Star Mountain hires former Barings executive
US-based debt investor Star Mountain Capital has hired Bob Shettle as a managing director.

Shettle formerly worked at Barings as co-head of North American private finance and chairman of its North American mezzanine and private finance investment committees. He has more than 30 years’ experience investing in senior debt, junior debt and private equity

Star Mountain founder and CEO, Brett Hickey, said: “Bob brings tremendous experience, insights and relationships to further benefit us as we continue to scale our business adding more value to business owners and investors in an aligned manner.”

QIC makes hires to capture new opportunities
Brisbane, Australia-based QIC Private Debt has made three hires to expand its capabilities and create more opportunities for its institutional investor clients.

Evan Nahnsen joins the firm from AMP Capital as head of private debt, infrastructure and will be based in the firm’s New York office where he will have responsibility for leading a global investment team.

Lindsay Scully also joins the New York office as a principal in the infrastructure debt team. Scully was formerly a director in the energy and infrastructure group at Credit Agricole Corporate and Investment Bank.

Lastly, QIC has added David Spiez as a general manager of strategy and operations for private debt at its Brisbane headquarters. He joins from Standard Chartered Bank where he was a managing director of commercial real estate.


Today’s letter was prepared by Andy Thomson with John BakieRobin Blumenthal and Michael Haley.

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