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Two European LPs have already defaulted on capital calls, and more are rumored, as LPs get hit with a one-two punch of large, often early capital calls and drying up distributions.
Fund Finance Partners looks at the current priorities of a market that has experienced rapid growth through the good times.
Debt funds and their portfolio companies have grown used to tapping cheap debt facilities, but underperformance amid the covid-19 crisis may see access to finance restricted.
There is not sufficient reward for investments that benefit society, argues Ignacio Diez Torca of Trea Direct Lending, who says it’s time for government tax breaks.
What are the key issues facing lenders in the face of global pandemic? Four partners from Ropes & Gray share their thoughts on issues ranging from MAC clauses to covenant defaults.
In recent years, fundraising has piled into the larger private debt funds – creating an elite of capital gathering powerhouses. Catalin Voloseniuc of SEE Credit Partners says its time to consider other options.
Heavily invested legacy vintages might suffer more than funds in market, with the jury still out on whether this crisis will be sharp and short like the GFC, or sharp and longer-lasting running through various cycles.
Space rocket on blackboard
First-time fund managers are set to have an even tougher time on the fundraising trail amid the pandemic, but there could be opportunities for those raising capital on a deal-by-deal basis.
Coronavirus impact on markets
Drawdowns could enable managers to pre-empt liquidity issues arising from the pandemic but may compound the problem for certain LPs.
There is light at the end of the tunnel for the private debt market as long as it learns from past crises, argues Gabriella Kindert of Mizuho Europe.
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