VIDEO: Underwriting through the pandemic and beyond

Twin Brook’s Drew Guyette says that although the characteristics of the covid-era recession and recovery have proved unique, the core principles of underwriting remain intact.

This video is sponsored by Twin Brook Capital Partners.

The past 20-plus months have demonstrated that not all recessions – and the challenges they present – are created equal.

Drew Guyette, chief credit officer and senior partner at Twin Brook Capital Partners, says the disruptions witnessed at the outset of the pandemic were somewhat similar to those of the global financial crisis, which was “in many ways a revenue-side demand recession”. However, he notes that as lockdowns eased, “you started to observe different factors and variables – characteristics that made you realise this was going to be more of a supply-side shock”.

When it comes to underwriting, although this period has proved unique, Guyette does not think the experience has fundamentally changed the approach of most senior lenders.

The pandemic has “placed greater emphasis on moments in time right now to evaluate, to focus in on… but it doesn’t negate the onset of that holistic approach and the thoroughness of a 60- to 90-day underwriting process”, he says. “Observing a variety of different industries and end markets and how they have performed has only reinforced, I think, the underwriting thesis that many senior managers have brought to this marketplace.”

Watch the video of our interview for additional insights from Guyette and his views on how this experience may impact the direct lending space going forward.