Heavy pre-payments compress returns for direct lenders

摘要

Direct lenders in the US are facing a rush of pre-payments as the companies they lend to take advantage of a vast amount of liquidity to refinance debt at cheaper rates. Some direct lenders (also known as private credit managers or business development companies) are choosing to make new investments with lower returns - and/or greater risk -in a bid to deploy dry powder and grow their portfolios (often by accepting the lower returns on offer from the traditional syndicated loan market); others are choosing to hold fire at the expense of smaller portfolios.