Non-public fairness sponsors and debtors are cautiously optimistic about their portfolios and count on M&A exercise to choose up within the second half of the 12 months, in response to a brand new Antares survey.
The $68bn (£52.4bn) various asset supervisor’s inaugural credit score market outlook survey discovered that almost all of respondents count on wholesome natural income progress this 12 months and fewer stress throughout their portfolios.
The survey, which polled personal fairness sponsors and Antares debtors from a variety of industries, discovered that almost all of debtors count on a ‘comfortable touchdown’ for the US financial system, with 78 per cent anticipating sluggish progress (0-2 per cent) over the subsequent 12 months and solely 10 per cent anticipating a recession.
Learn extra: Ex-Antares boss joins Petra Funds board
In step with their outlook on the financial system, greater than two thirds (68 per cent) of debtors count on “modest” or “sturdy” income progress this 12 months, whereas 74 per cent count on wholesome, natural earnings progress.
In the meantime, the bulk (58 per cent) of personal fairness sponsors are seeing the pressures dealing with their portfolio corporations as steady in comparison with 2023, with 21 per cent seeing lowering stress.
And most sponsors count on to accumulate a enterprise throughout the second half of 2024, with nearly 80 per cent saying it’s extra seemingly than not.
The industries seen as most engaging by sponsors embrace industrial (29 per cent), enterprise companies (18 per cent) and healthcare (17 per cent).
Learn extra: Non-public credit score defaults sluggish in 2024
The survey additionally revealed that 86 per cent of sponsors are exploring continuation funds as a liquidity resolution, 38 per cent are exploring NAV loans and 11 per cent are contemplating promoting GP stakes to release capital.
“Our survey signifies that whereas personal fairness sponsors and center market debtors – the expansion engine of the U.S. financial system – stay vigilant of ongoing macroeconomic challenges, their expectations for the latter half of the 12 months recommend a credit score market poised for progress,” mentioned Timothy Lyne, chief government of Antares Capital. “The info aligns with what we’re seeing throughout nearly all of our portfolio, one of many largest and most various within the business. Debtors, primarily throughout non-discretionary and extremely defensive sectors, proceed to exhibit sturdy fundamentals together with year-over-year income and EBITDA progress albeit at a slower tempo.”
Learn extra: Non-public credit score to “thrive” as dry powder reaches $292bn
