Rule 17d Direct Lending Explained: Navigating Regulatory Compliance and Opportunities

Rule 17d-1 of the Investment Company Act 1940 encompasses specific provisions affecting joint transactions and arrangements among registered investment companies and their affiliates. This regulation requires the Securities and Exchange Commission (SEC) approval for joint enterprises, which may include direct lending activities, ensuring these arrangements do not disadvantage the fund or its shareholders. Given the […]

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S&P/LSTA Leveraged Loan Index: Understanding Market Performance Dynamics

The S&P/LSTA Leveraged Loan Index is a widely recognized barometer for the US leveraged loan market, tracking the performance of leveraged loans based on market weightings, spreads, and interest payments. Developed by S&P Global Market Intelligence in partnership with the Loan Syndications and Trading Association (LSTA), the Index provides investors with a comprehensive benchmark reflecting

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Default and Recovery Private Credit: Essential Strategies for Investors

Private credit has emerged as a dynamic component of today’s financial ecosystem, proving essential in many companies’ capital structures. This form of credit encompasses a range of debt financing provided by non-bank institutions, distinguishing itself from traditional bank loans with its customizable terms and direct negotiations. Various debt instruments, from simple loans to more complex

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Senior First Lien vs. Senior Second Lien: Understanding Priority in Debt Repayment

In the landscape of debt financing, the distinction between senior first lien and senior second lien is crucial for lenders and borrowers. A first lien is generally the primary loan against an asset, taking precedence in claim over subsequent loans in the event of a default or liquidation. On the other hand, a second lien

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Senior Debt Explained: Understanding Its Priority in Corporate Finance

Senior debt is a term used in finance to describe a class of debt with the highest priority for repayment in the event of a borrower’s default or bankruptcy. Essentially, it is the first level of debt to be repaid before any other junior or subordinated debt. Lenders of senior debt are considered the most

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Credit Rating vs Shadow Rating: Understanding the Key Differences

Credit ratings and shadow ratings gauge an entity’s creditworthiness but utilize distinct methodologies and serve different purposes. Traditional credit ratings, provided by recognized agencies like Standard & Poor’s, Moody’s, and Fitch, are widely used benchmarks in the financial world. These ratings are based on a comprehensive analysis of financial statements, business models, industry risks, and

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Yield-to-Three-Year Takeout: Understanding the Long-Term Investment Strategy

In private debt markets, yield-to-three-year takeout is a metric that investors and economists closely observe. It represents the expected annual return on investment until it is taken out or replaced with longer-term financing, typically in three years. This approach is particularly relevant in environments where interest rates are constantly shifting, offering a glimpse into corporate

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Upper Middle Market Direct Lending: Insights into Private Credit Strategies

Upper middle market direct lending refers to non-bank entities providing loans to companies more extensive than traditional middle market firms yet not large enough to access syndicated loan markets efficiently. This segment of the lending market serves an important niche—filling a gap between commercial bank lending and more extensive corporate finance solutions. It offers an

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Unitranche Loan: Streamlining Corporate Finance with Hybrid Debt Structures

Unitranche loans have emerged as an innovative financing solution, especially within the middle market for leveraged buyouts. These loans combine senior and subordinated debt into one debt instrument, simplifying the capital structure for borrowers. Typically issued by a single lender or a syndicate, unitranche loans offer a blend of senior and mezzanine debt features, resulting

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Venture Capital Trends: Navigating the Investment Landscape in 2024

Venture capital is a form of private equity financing that venture capital firms or funds provide to startups, early-stage, and emerging companies deemed to have high growth potential or have demonstrated high growth. By offering capital in exchange for equity, venture capitalists take on the risk of financing risky startups in the hopes that some

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