U.S. Shadow Lenders See Loan Volume Slow, Quality Decline
- Still, deals may pick up in year-end push: Ares Capital
- Middle-market lenders are ‘squeezed,’ struggle to fundraise
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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.
Private debt firms were tapped for at least two large transactions -- a $1.6 billion refinancing loan for insurance brokerage Risk Strategies and a $788 million transaction for foodservice equipment parts distributor Parts Town LLC. The deals are part of a trend toward bigger unitranche loans, which blend first-priority and subordinated debt into one, so the yield is typically higher than for the first-lien loan.