Private equity firms have access to a debt market that is even more borrower-friendly than that seen in the years before the financial crisis, according to debt adviser Marlborough Partners.
“We are going through the most ‘borrower friendly’ period in the history of leveraged finance with even more flexibility, lower yields and higher leverage multiples than those experienced in 2007,” says Marlborough partner Romain Cattet in the firm’s latest quarterly report on UK mid-market lending.
These conditions are due in part to continued competition for market share between banks and debt funds. Direct lenders are attempting to win more business by offering bigger cheques, cheaper pricing and looser terms.
Some debt funds are agreeing to fund riskier deals that other lenders might reject, such as deals involving a target with low Ebitda figures, operations in an unstable country, or a chequered credit history.
Cattet says the UK market is so borrower-friendly that some deals are being refinanced as soon as six months after completion.