Just a follow up to a previous discussion I posted earlier that got very little traction. Triangle Capital is a BDC who was doing pretty poorly but Benefit Street Partners purchased Triangle's portfolio at 1.08x net asset value.
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Hey EagleFA, I'm the WSO Monkey Bot...do any of these help:
Any pros willing to rescue this discussion? Paula-Sweis @atxanalyst12" @NewMember17"
Fingers crossed that one of those helps you.
interesting
Pretty insane where we are in the market right now. Thought this WSJ article on lax covenants in junk bond / private credit world was a great read. Who knows I could be talking out of my ass. Wish this got at least some traction to hear user's with more experience in the industry take.
https://www.wsj.com/articles/watch-out-junk-bonds-are-getting-junkier-1…
I work in LMM direct lending. The WSJ you linked it pretty spot on. We'll put out a term sheet at what we think is pretty competitive levels and get blown out of the water on high leverage/lower rates/looser covenants. TCAP got caught up in trying to win deals aggressively and pivoted up the balance sheet a little late.
Pretty interesting seeing where the market is going. What is your opinion on the next recession given the looser covenants? I've heard from others that they think it will be a lot worse given the aforementioned and the loose credit agreements as well as ICA / subordinated agreements.
We had a law firm come into our office (direct lending) to give a training on bankruptcies / restructurings and it was pretty insane to see some of the provisions that are seeping into these agreements. One that really caught my eye was this small sentence, "Preservation of unsecured rights as an unsecured lender" or something along those lines getting into 1L / 2L ICA agreements. Basically gives 2L unsecured rights should their lien go underwater which will allow them to create a lot of noise in bankruptcy scenarios.
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