Late January Financing Market Update [SENT 1/29/24]

There has been strong risk-on lender sentiment for ‘known quantity’ credit across multiple debt markets in early 2024.

Broadly syndicated TLB market – healthy demand for repricings, refinancings, and recapitalizations for larger tranche existing issuers that are performing. Think up to ~75 bps in loan spread reduction

Pro rata – top of league table arrangers getting calls from participants looking new deals, after these institutions were exceedingly picky in 2023 and turned down a lot of transactions

ABL – banks bemoaning light supply of ‘inside the box’ ABL loan opportunities, expecting to battle high levels of competition for these transactions in 2024

Good time to be a known issuer with an inside the fairway deal. I expect that we will start to see some “broadly syndicated TLB takeout of 2022/2023 vintage private credit deal” announcements if this market tone holds up, as call protection burns off on transactions where the use case for private credit was mostly market dislocation driven.

If your company isn’t a known issuer with an inside the fairway deal, not a lot of shortcuts out there. Lenders are maintaining discipline on credit and are doing extensive underwriting work on new opportunities. Borrowers have to present their story in a very structured way, and then get that story in the hands of the right prospective lenders in an appropriately competitive process to deliver a good financing transaction outcome.   This is what we specialize in at Fountain Gate Advisors.  
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