Enterprise growth corporations (BDCs) and interval funds have prolonged their personal credit score maturities amid improved financing situations.
The US autos, whose property are majority personal credit score, have greater than halved their personal credit score maturities for 2024 over the previous yr, in response to S&P International Rankings.
The rankings and analysis agency analysed the general public filings of 190 BDCs and interval funds for the reason that first quarter of 2021.
Learn extra: S&P: Rising defaults will check asset high quality of personal credit score funds
“Whereas debt held by BDCs and interval funds represents only a slice of the $1tn (£0.77tn) US personal credit score market, these portfolios supply a glimpse of how these maturities are altering,” the report mentioned.
“Near $5bn in personal credit score loans held by BDCs is scheduled to mature this yr as of first-quarter 2024 – 55 per cent decrease than the 2024 complete as of first-quarter 2023. Debtors have additionally diminished 2025 maturities by 22 per cent over the previous yr.”
S&P highlighted that maturities for personal credit score held by BDCs and interval funds peak in 2028, when practically $60bn comes due.
This mirrors the broadly syndicated mortgage (BSL) market, which additionally peaks in 2028.
Learn extra: Personal credit score defaults gradual in 2024
“Each new borrowing and the extension of current debt have contributed to the escalation of 2028 maturities, that are up 33 per cent since first-quarter 2023 and up 119 per cent since first-quarter 2022,” the report mentioned.
S&P famous “brighter financing situations this yr” for each BSL and personal credit score debtors.
Round $155bn in personal credit score loans held by BDCs is maturing between now and 2028, and North American personal credit score funds had virtually $300bn in ‘dry powder’ as of July 2024, in response to Preqin knowledge cited by S&P.
“Personal credit score lenders seem to have greater than adequate liquidity to fulfill these upcoming maturity calls for,” the analysis mentioned.
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Nonetheless, S&P warned that US rates of interest will strain some smaller and weaker debtors. Whereas the Federal Reserve is anticipated to begin reducing charges subsequent month, S&P expects a lag earlier than the diminished funding price reaches these debtors, till the primary quarter of 2025 on the earliest.
It expects to see elevated use of payment-in-kind amenities over the subsequent few quarters.
“Financing situations this yr have supported personal credit score refinancings of near-term debt, however that is including to maturities down the road, together with within the peak yr of 2028,” S&P mentioned. “With an unsure economic system clouding the horizon, many query whether or not financing situations can stay as supportive as they’ve been within the first half of 2024.”
