December / January 2014 Issue

    Chinese debt markets – risky business

    There are many pitfalls to be negotiated when lending in debt-fuelled China. Anna Devine looks at whether investors are ignoring risks in the race for higher yields.

    A place in the sun: Spanish opportunities

    Spain is attractive once more, thanks to the restructuring of the banking sector and a year in which foreign investors piled back into Europe. Anna Devine takes a closer look at the continuing potential.

    At the crossroads

    Debt is not typically a laughing matter. But in business, as with most things, it’s important to retain your sense of humour. At PDI’s London Roundtable, the discussion dug through covenant-lite structures, how different areas of the debt markets influence each other, and whether real estate or leveraged finance plays the canary in the coal-mine role. We also talked about the strong economic headwinds facing Europe and how those will affect alternative lenders. All very serious stuff, but despite it all, our group of managers also found reasons to be cheerful, as Rachel McGovern found.

    Going deep into the middle

    PDI talks to Kevin Grossman of White Oak Global Advisors about the firm’s origination plans in the US mid-market.

    Recipe for Success

    In late 2013, US private equity firm Apollo Global Management spotted an opportunity in the Tragus Group, one of the biggest restaurant chains in the UK, seizing control from erstwhile owner, Blackstone. The loan-to-own investor’s initial investment and subsequent debt for equity swap is seen by some in the market as ‘best in class’. Anna Devine examines the essential ingredients.

    Key issues in leveraged lending

    Whilst Europe still doesn’t have a market that is as deep as the US, nor documentation that is as sponsor-friendly, there are new trends afoot that no practitioner can afford to ignore, writes James Chesterman.

    The rise and rise of direct lending

    As a new funding solution for corporates, as well as an asset class for institutional investors, European direct lending has evolved strongly this year. Max Mitchell, Head of Direct Lending at ICG, examines the reasons why.

    Soaking up Potential Stress

    An article from Serone Capital Management in September’s edition of PDI commented that European Structured credit was an attractive way for institutional investors to generate yield. Investment analyst Stuart Chapman now analyses the robustness of mezzanine CLO securities to very high and sustained default rates and concludes that the current cohort of ‘CLO 2.0’ securities are up to the challenge.

    Critical mass

    The direct lending group at Ares Management has scaled up over the years with noteworthy moves into Europe, new product lines, as well as bolstering its business through acquisitions. The firm’s executives in New York and Europe recently shared some of the thinking behind these initiatives with Anastasia Donde.

    LPs are listening

    Now it’s up to managers and the wider debt community to work together with borrowers and investors to facilitate sound investment, PDI hears. Anna Devine responds.

    The trouble with skin in the game

    A slew of potentially crippling regulation over the last few years has not slowed a buoyant CLO market on both sides of the Atlantic, finds Rachel McGovern.