Debt Download
February 29, 2024

Debt Download

Welcome to Goodwin's Debt Download, our monthly newsletter covering what you need to know in the leveraged finance market. Happy Leap Year! We’re thrilled that this year’s Debt Downloads will provide an additional day of loan coverage. 

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In the News

Quick roundup of recent new direct lender debt funds (and related updates):

Goodwin Insights – U.K. Crystal Ball Predictions

For this edition of Debt Download, we highlight the Goodwin Debt Finance team’s predictions for 2024 in leveraged finance in the United Kingdom. Here is a quick summary of what we are expecting:

The only thing you can be sure of in 2024 is that nobody knows what’s going to happen. Every think-piece you read has some fairly anodyne macro angle—“inflation is down, rates will follow” or “bank-led financing is dead”—which is quickly rendered irrelevant by blockbuster job numbers in the U.S. and a concomitant pause in monetary loosening (both in the U.S. and the U.K.) or, in the last few weeks, a large bank-led bond deal in place of a credit fund option, which we were told was 1000% going to get done.

Given the U.S. election looming in November, our best guess is that European PE finance markets will limp along in 2024—the phrase “survive until 2025” is being muttered on the street. Financing for good credits will continue to be easier to achieve than at the start of 2024, but we are unlikely to go back to the halcyon days of the pandemic (at least for the markets) and immediately post-pandemic sugar rush of loose monetary policy and system-wide FOMO. However, given the uncertain macro environment, the likely other themes in the PE financing markets are going to be a case of déjà vu all over again, and last year’s trends will persist; for example: 

  1. bolt-ons and buy-and-build strategies will be a key focus for many sponsors until the conveyor belt of buy-out opportunities fully restarts; 
  2. many financial sponsors will look at the secondaries space, continuation funds, NAV and the like to realize (at least in part) some of their investments; and
  3. given the persistent environment of high rates, non-cash-pay debt (whether in the form of PIK or preferred equity instruments or simply a PIK toggle option in a unitranche financing) will continue to be a key area of focus, especially for high growth or tech companies.

One feature that may reappear if U.S. monetary loosening gets significantly ahead of central bank policy in London and continental Europe is the trend for Yankee financings, as was the case in the early to mid-2010s (i.e., deals which are underwritten in the U.S. credit markets—public or private—for companies without an obvious U.S. nexus). That being said, a key driver last time around was better flexibility in U.S. loan documentation, and we have seen a steady improvement/erosion (depending on your viewpoint) of documentation terms in European deals since then…

On that note, documentation will continue to favor sponsors and borrowers more generally—the much-vaunted snap back on terms to make them more lender-friendly, which was supposed to accompany the deal slow down, never arrived and terms are, broadly speaking, following the same trend as they have for the last 10 or so years—toward a more sponsor-friendly and “flexible” approach.

Last, but not least, credit funds are obviously here to stay. The golden age of private credit is not over yet.

In Case You Missed It – Check out these recent Goodwin publications:

Ten Considerations for Large-Cap and Upper-Middle-Market Borrowers in Early Stages of Distress; FinCEN Proposes AML Program Rule for Investment Advisers; CFPB Announces New Proposed Rule to Target Junk Fees; Federal Reserve Announces the Bank Term Funding Program will Cease Making New Loans as Scheduled on March 11; Playing the ‘What If’ Game When Reviewing Fintech–Bank Partnership Agreements; Federal Reserve Announces it Will Extend the Comment Period on its Interchange Fee Proposal Until May 12, 2024; SEC Adopts New Rules Applicable to SPACs, Shell Companies and Projections 


For inquiries regarding Goodwin’s Debt Download or our Debt Finance practice, please contact Dylan S. Brown, Nikolaus J. Caro, and Robert J. Stein.

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This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee a similar outcome.