New Lenders Allow Looser Terms in Mid Market
Large institutional investors are participating more in middle market loans because of a lack of new issuance elsewhere, said Kevin Burke, head of loan sales and trading for GE Capital Markets. Tighter pricing and looser structures are following, Burke said.
Invesco and Eaton Vance participated in a $352 million loan for Centerplate that was syndicated Oct. 16, Burke said. As refinancings dominate new large cap loans, the shortage of “true new issue” has driven more broadly syndicated investors to the middle market, he said.
“Larger institutional investors are expressing more interest in the middle market,” he said in a telephone interview. “They are dipping down lower in the size of the deal they’ll do.”
Borrowers are achieving covenant-lite structures as demand to invest remains high, he told delegates at the 17th annual conference of the LSTA in New York Oct. 17. GE underwrote a $349.6 million, covenant-lite refinancing for Tank Holdings, even though it didn’t “necessarily justify covenant lite,” because GE didn’t want to lose the deal, Burke said.