Middle market

Analysts and ratings companies are sounding alarms as a number of BDCs rush to shore up finances, or throw lifelines to their heavily indebted borrowers.

Direct lenders around the world are talking with borrowers about easing interest payments, waiving penalties and relaxing covenants as they assess the growing damage to their portfolios caused by the coronavirus pandemic.

Asset manager PGIM Inc. is looking to at least triple its investments in the growing direct lending market where it wants to compete with banks to fund mid-size companies outside of the buyout space.

The state retirement system is looking to dedicate one of every six dollars it manages to direct lending - more than five times the industry average.

Family offices—mini-investment firms set up by the super rich to manage their personal wealth—have poured more and more cash into direct lending, Preqin says.

First Eagle, with $99 billion AUM, will expand its presence in structured finance-based direct lending to middle-market firms through the acquisition by uniting the two firms’ credit-business platforms, according to a release.

The month of October brought some jumbo unitranche loans to the direct lending market. It also brought declines in the quality and terms of broader deals, according to some participants.

According to Kroll, this is the middle-market lender's first securitization of growth-opportunity loans made to venture-capitalized software firms that have yet to develop earnings or substantial assets.

The $502 million Diamond CLO represents the first securitization of small/medium enterprise loans since Blackstone in the second quarter relaunched a direct lending business.