Private debt : opportunities in corporate direct lending / Stephen L. Nesbitt.

Format:

Book

Author/Creator:

Nesbitt, Stephen L., 1953- author.

Series:

Wiley finance series.

THEi Wiley ebooks.

Wiley finance

THEi Wiley ebooks

Language:

English

Subjects (All):

Investments.

Small business--Finance.

Small business.

Bank loans.

Physical Description:

1 online resource (259 pages).

Edition:

1st edition

Place of Publication:

Hoboken, New Jersey : Wiley, 2019.

System Details:

Access using campus network via VPN at home (THEi Users Only).

text file

Summary:

The essential resource for navigating the growing direct loan market Private Debt: Opportunities in Corporate Direct Lending provides investors with a single, comprehensive resource for understanding this asset class amidst an environment of tremendous growth. Traditionally a niche asset class pre-crisis, corporate direct lending has become an increasingly important allocation for institutional investors—assets managed by Business Development Company structures, which represent 25% of the asset class, have experienced over 600% growth since 2008 to become a $91 billion market. Middle market direct lending has traditionally been relegated to commercial banks, but onerous Dodd-Frank regulation has opened the opportunity for private asset managers to replace banks as corporate lenders; as direct loans have thus far escaped the low rates that decimate yield, this asset class has become an increasingly attractive option for institutional and retail investors. This book dissects direct loans as a class, providing the critical background information needed in order to work effectively with these assets. Understand direct lending as an asset class, and the different types of loans available Examine the opportunities, potential risks, and historical yield Delve into various loan investment vehicles, including the Business Development Company structure Learn how to structure a direct loan portfolio, and where it fits within your total portfolio The rapid rise of direct lending left a knowledge gap surrounding these nontraditional assets, leaving many investors ill-equipped to take full advantage of ever-increasing growth. This book provides a uniquely comprehensive guide to corporate direct lending, acting as both crash course and desk reference to facilitate smart investment decision making.

Contents:

Cover

Title Page

Copyright

Contents

Introduction

Acknowledgments

Chapter 1 Overview of US Middle Market Corporate Direct Lending

The Rise of Nonbank Lending

Direct Lending Investors

Direct Lending Illustration

Chapter 2 The Historical Performance of US Middle Market Direct Loans

The Cliffwater Direct Lending Index (CDLI)

US Middle Market Direct Loan Performance

Yield on Direct Loans

Net Gains (Losses)

Net Realized Gains (Losses)

Net Unrealized Gains (Losses)

Total Return

Chapter 3 Performance Comparisons to Other Asset Classes

Return

Risk and Maximum Drawdown

Chapter 4 Current Yield or Yield to Maturity?

Current Yield

Yield-to-Three-Year Takeout

Chapter 5 Comparative Credit Loss Rates

Chapter 6 How Liquid Are Direct Loans?

Chapter 7 Credit as a Separate Asset Class

What is an Asset Class?

Credit and Asset Allocation

Private Credit Opportunities

Chapter 8 Loans and the Theory of Credit

The Merton Model

Volatility

Risk-Free Rate

Time to Maturity

Estimating Loan Risk

Estimating Loan Portfolio Risk

Testing the Merton Model

Merton Model with Covenants

Chapter 9 Risk Premiums in US Middle Market Lending

Methodology

Chapter 10 Covenants and the Loan Agreement

Chapter 11 Should Direct Loan Portfolios Be Leveraged?

Simulated Direct Loan Portfolios with Leverage

Determinants of Financing Costs

Chapter 12 Business Development Companies

What is a BDC?

BDC Industry Statistics

Private BDCs

Publicly Traded BDCs

BDC Market Indices

BDCs - A Tale of Two Markets

BDC Dividend Yield

BDC Total Return

Chapter 13 Selecting Direct Lending Managers

Selection Matters

Manager Direct Loan Yield

Credit Losses Across Direct Lenders

Direct Lending Managers

Organization.

Investment Strategy

Origination

Underwriting

Loan Construction and Monitoring

Workout

Portfolio Construction

Leverage Financing

Fees and Expenses

Track Record

Chapter 14 Loan Valuation

Chapter 15 Investment Fees

Direct Lending Fee Structures

Combined Fees for Direct Lenders

Manager Style and Fees

Comparisons to Private Equity

Comparisons to BDCs

Fees and Alpha

Chapter 16 Direct Lending and J-curve Mitigation

Chapter 17 Portfolio Construction

Direct Lending Benchmarks

The Importance of a Benchmark

The CDLI as a Private Debt Benchmark

Diversification

Chapter 18 Expected Returns and Risks from Direct Lending

Expected Return

Expected Risks

Chapter 19 Asset Allocation

Chapter 20 European Middle Market Direct Lending

Key Characteristics of the European Direct Lending Market

Evolution of the European Direct Lending Market

Capital Structure of European Direct Loans

Risk Factors

Chapter 21 The Borrower's Perspective

US Borrowers

European Borrowers

Chapter 22 Other Private Debt Opportunities

Real Estate Debt

Market Size and Structure

Expected Return and Risk

Investment Strategies

Mezzanine Debt

Collaterized Loan Obligations (CLOs)

Leveraged Loans

CLO Structure

CLO Economics

CLO Mechanics

CLO Collateral Manager

Asset-Based Lending

Infrastructure Debt

Consumer/Marketplace Lending

Royalties

Venture Debt.

Market Size and Structure

Expected Risk and Return

Rescue Financing

Reinsurance

Litigation Finance

Conclusion

Glossary

List of Exhibits

Index

EULA.

Notes:

Includes index.

Includes bibliographical references and index.

Description based on print version record.

ISBN:

9781119501169

1119501164

9781119501138

111950113X

9781119501275

111950127X

OCLC:

1057731904