Middle Market Leveraged Finance - Current Market Conditions Q3 2020

Published on: 11/12/2020

Capstone Headwaters’ Debt Advisory Services Team has published its Q3 Middle Market Leveraged Finance Report, offering insight on the volume, pricing, and leverage statistics of today’s credit markets.

Middle market loan volume recovered modestly in Q3, but nonetheless represented a fraction of historical levels.  The rapid roll-out and adoption of government stimulus packages, including the Paycheck Protection Program, somewhat mitigated the initial impact of COVID-19 on loan portfolios.  Still, LCD’s survey of portfolio managers yielded an average anticipated default rate of ~5.3% for 2020 and over 6.0% for the period ending June 30, 2021, a level nearly 400 bps wider than the same survey results at the end of 2019.  This pandemic-induced increase in defaults has caused lenders to rethink the way they amend credit agreements and support distressed borrowers in order to preserve value.  

Available for download below, the report discusses:

  • The modest recovery in loan volume from Q2
  • The emergence of COVID-19-driven credit amendment agreement trends
  • How issuers are favoring higher quality borrowers to add safety

For more information on this report, please contact Managing Director Kent Brown.

Key Contacts

Kent Brown

Head of Debt Advisory Group

Brad Harrop

Vice President

Adam Morris

Vice President

Brian Schofield

Managing Director