The Secured Lender


The first quarter of 2011 was a busy start for asset-based lenders, who pushed over $27B of issuance through market - the highest quarterly issuance on record. But issuance levels have been fitful. With refinancing largely completed and the refi cliff pushed out to 2016, the market is eagerly anticipating a pick-up in sponsored buyout activity to drive issuance.

It was a busy start to the year for asset-based lenders who pushed over S27 billion of issuance through the market in lQn - the highest quarterly issuance on record. Building on this momentum, 2Q11 activity at over Sn billion to date (exclusive of deals in the pipeline) is nothing to scoff at (Fig. 1). Nonetheless, asset-based lenders are wrestling with evolving market paradigms which, ata minimum, have sources questioning where new issuance will come from and, at a deeper level, whether broad retail syndication is as important to the market today as it was a few short years ago.

"This year it seems that everyone is busy," notes one arranger. "But it is redos and re-upping of commitments. Deals that were syndicated a few years ago have come back, but [everyone is] holding more."

Sources say that smaller ticket holders have become scarce, largely because in today's lending environment - where liquidity remains robust and dealflow qualified - lenders are writing bigger checks and invitations to retail syndications are tougher to come by.

"Twenty five million dollar ticket holders are [largely] gone," says one lender.

Market capacity has increased but dealflow has not kept pace.

"To get a Si billion deal done before, you needed S75 million ticket holders [in a retail syndication]," source says. …

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