Welcome to Private Debt Investor. Launching a new magazine is no easy task, but it’s one we at PEI Media have undertaken because, like it or not, the landscape is changing.
When the history books are written they will note that after the ‘Great Financial Crisis’ came the ‘Great Deleveraging’. Estimates vary wildly from billions to as much as a trillion Euros, but one fact is consistent: the banks are moving – or have moved – debt off their balance sheets.
It is a seismic transition. It is also a huge opportunity for non-traditional providers of debt. Investors still want the attractive risk reward profile that debt products can offer from senior loans to mezzanine, second lien to high yield. Businesses, infrastructure assets and real estate all need financing. And alongside the new deals, there are existing ones to refinance too.
A steady flow of alternative asset managers are looking to capitalise on this demand, intermediating investor and borrower with a variety of innovative products. Several big LPs, including the New Hampshire Retirement System, have committed to debt strategies this year.
The returns from private debt are appealing, as is the risk profile. In many cases, the flexibility private debt funds offer allows them to react quickly to market trends, diversified across asset classes.
Dealing with the raft of regulation tabled in the wake of Lehman Brothers will be a challenge, of course. But there’s a shift in attitudes taking place – banks themselves are remembering the importance of fundamental analysis to mitigate risk, rather than doing so through simple diversification.
We have been tracking these developments avidly. And while Private Equity International, PERE and Infrastructure Investor have from time to time dabbled in debt, this nascent asset class deserves, we felt, its very own publication.
We believe Private Debt Investor is relevant to all participants in a modern capital structure: from the funds which originate and acquire debt, to the banks themselves, who remain an integral part of this ecosystem; and from the advisors who work on deal structuring and fund formation, to the investors who are increasingly committing capital to this asset class.
Private Debt Investor will strive to help you understand this rapidly-evolving space; provoke debate; and reflect the nuances of this varied, dynamic and increasingly compelling asset class.
Editor, Private Debt Investor