Alternative Credit Investor | Covenant Breaches Decline for Third Quarter in a Row
Feb 2024
Originally posted by Alternative Credit Investor on February 22, 2024.
According to the Lincoln International Valuations & Opinions Group proprietary data, lenders and borrowers are proactively addressing potential defaults and thus fewer private equity (PE)-backed companies are breaching covenants.
Richard Olson, Managing Director in Lincoln’s Valuations & Opinions Group, commented, “Covenant breaches declined for the third quarter in a row, and lenders continued to support borrowers with amendments, as well as PIK pricing to conserve cash.”
European mid-market companies are also performing well. In an analysis of 300+ PE-backed businesses, Lincoln found that private credit fair values were mostly flat at 97.3 percent in Q4 and credits in stress / distress continued to be stable at 2%.
Richard said, “Transactions continued to get done for the small number of high-quality mid-market businesses put up for sale – in many cases with robust multiples – and debt has become more available both from credit funds and banks, with the limited number of new deals providing competitive tension on private credit pricing.”
Summary
-
Lincoln International’s Richard Olson provides an update on the European private market.
- Sign up to receive Lincoln's perspectives
Contributor
Meet Professionals with Complementary Expertise in Valuations & Opinions
Related Perspectives in Valuations & Opinions
Lincoln Private Market Index Continued to Climb in the First Quarter on the Back of Steady Earnings Growth
Despite solid portfolio company performance, buyout activity remains sluggish, but sponsors have deployed alternative strategies to distribute capital to investors The Lincoln Private Market Index (LPMI), the only index that… Read More
Q1 2024 Lincoln Private Market Index
Lincoln Private Market Index Continued to Climb in the First Quarter on the Back of Steady Earnings Growth The Lincoln Private Market Index (LPMI), the only index that tracks changes… Read More
An Overview of the Lincoln Private Market Index
The Lincoln Private Market Index (f/k/a Lincoln Middle Market Index), is the only index that tracks changes in the enterprise value of U.S. privately held companies—primarily those owned by private… Read More
Lincoln International adds Dr. Simon von Witzleben as Managing Director
Lincoln International, a global investment banking advisory firm, is pleased to announce that Dr. Simon von Witzleben has joined as a Managing Director in the firm’s Valuations & Opinions Group… Read More