/>iProskauer released results from The Private Credit Group’s market survey for 2018. The comprehensive survey features the predictions of top lending institutions, which complement the findings of Proskauer’s proprietary deal data report that was released earlier this year. Together, the analysis of the private credit deal terms alongside the survey, provides clients with a unique and in-depth look into the state of the credit markets and forecasts for the remainder of the year.
Key highlights from the report include:
- UK and U.S. interest rates are widely expected to increase, though there is less certainty around the Eurozone
- Respondents are generally optimistic about the year ahead; 88% expect deal activity to stay the same or increase
- Dry powder levels are considered the most important driver of deal flow overall
- Competition is the greatest challenge for dealmakers overall, with high transaction multiples slightly more concerning for respondents from the UK and Europe
- Business Services, Healthcare, Software and Technology, Manufacturing and Transport and logistics are being targeted for investment by ¾ of respondents, with Software and Technology experiencing significant year-on-year growth in the US
- 2/3 of respondents are currently raising a debt fund and 78% plan to fundraise over the next 12 months
In this report, we will share respondents’ views on deal flow for the year ahead, drivers of deal volume and the challenges facing dealmakers. Respondents also gave us their market predictions for 2018, and expectations for pricing, defaults and interest rates. Looking more broadly at economic and political factors affecting the market, we captured respondents’ thoughts on GDP growth and the impact of US Tax Reform and the European Leveraged Lending Guidelines on deal flow, financing and appetite for investment.
Looking more broadly at economic and political factors affecting the market, we captured respondents’ thoughts on GDP growth and the impact of US Tax Reform and the European Leveraged Lending Guidelines on deal flow, financing and appetite for investment. Taking those market predictions into consideration, we then looked at respondents’ investment strategies, including:
- Hot markets for investment
- Most commonly used lending vehicles
- Plans to fundraise and plans to purchase a loan portfolio Finally, we will present respondents’ feedback on the conditions and controls which govern investments, such as:
- The equity required on transactions
- Use of financial covenants
- The maximum leverage underwritten
- The most important risks to lenders
