Creditor Corner

The ultimate weekly source for great financial and restructuring news affecting creditor rights specifically curated for you

Weekly News – October 11

Moody's and twitter-sphere take on PE driven defaults, Boeing in the cross-hairs, latest LME technology -- the super holdco, Milbank in the hot seat, explosive text chain revealed, and much, much more...

Creditor Corner

for the week ended October 11, 2024

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BREAKING NEWS

Moody's and twitter-sphere take on PE-driven defaults, Boeing in the cross-hairs, Altice game of thrones, latest LME technology -- the super holdco, Milbank in the hot seat, explosive text chain revealed, and much, much more...

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Bruce Richards on the Markets:

90%

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Tweets of the Week

PE Fund to Lonely Creditor...

leading Moody's to say... 

PE-backed companies are 2x more likely to default based on a new analysis leading some of us to call this the Sponsor-in-Possession.

leading Creditors to respond:

F*ck U PE Firm!

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Accuride files for BK

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Quote of the Week

In the news

Rx pros be like...

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Game of thrones in Altice...

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LME meets SPAC technology

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In the News

Explosive Text Chain Revealed

"Later that night [before the hearing to seal Van Deelen's accusations], Cavenaugh and Polnick texted about an apparent phone call between Jones and Josh Sussberg, another Kirkland partner with whom they were working on the McDermott case.

“So he did talk to Suss or he’s going to talk to suss?” Cavenaugh asked.
“Already did,” Polnick said.
“That’s interesting. Who called who?” asked Cavenaugh.
“Jones called Suss,” Polnick responded.
Jones later signed an order to seal the letter permanently."

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tastes good to me...

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Milbank in the hot seat....

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Featured Content

90%

Do you know that ~90% of the companies in the U.S. that generate $50M to $250M of revenue annually are private companies? Do you know that there are ~200,000 private middle market companies in the united States?

The cohort of companies with $50M to $250M of annual revenue represents companies that Marathon focuses on in the Middle Market and nearly all are privately owned: ~90%! 

Marathon Asset Management estimates that there are 10,000+ Private Equity Sponsor-owned Middle Market Companies in the U.S.

I believe next year (2025) will prove to be a strong vintage year for Direct Lending funds as the stars are aligned. The LBO machine will turn it up a notch, Fed is easing rates/credit conditions, default rates will decline, and corporate earnings and GDP are trending well.

 

Capital Allocators must differentiate between managers and strategies:

- Middle Market Loans (tight covenants & wider spreads) vs. Upper Middle Markets (weaker covenants & tighter relative spreads and also faces competition with the Broadly Syndicated Loan market).

- Middle Market Loans backed by PE Sponsor have a loss rate of ~70bp TTM vs. Middle Market Loans backed by Non-PE Sponsor have a loss rates of 1.3%; nearly 2x sponsor-led deals.

- Quality of Deal Flow (debt-to-EBITDA ratio, LTV, fixed charge ratio, free-cash flow, amortizing debt, cash-pay or PIK, cyclical vs non-cyclical business, etc.) and how it translates into better performance and lower losses?

- What is the Private Credit manager's Historical Loss Rates?

- What is the Private Credit manager's sourcing edge?

With over 10,000 PE owned companies, a Private Credit manager can be highly discerning. It is a great time to lender in this market environment and Private Credit can be a great diversifier for investor’s portfolios.

To follow Bruce's thoughts on the markets, investing and more, follow

@bruce_markets

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Absolute Priority Rule & Valuation Analyzed

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Reprinted from ABI’s Rochelle’s Daily Wire with the permission of the American Bankruptcy Institute (www.abi.org). Click here to have Bill Rochelle’s in-depth bankruptcy case insights delivered to your inbox each weekday morning.

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Goldilocks

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Middle Market Report showing resilience

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