Below are listed a few encouraging signs in the capital markets as the year turns:
* Bank loans trading at 60 cents on the dollar in April are now near par and collateralized loan obligations, which means less investors have less reason to avoid new issues in favor of the secondary market;
* New mezzanine funds from the likes of
* Severa mid-market lenders are gearing up for action. In September, Fifth Third Bancorp announced the formation of Fifth Third Sponsor Leveraged Finance to lend to sponsor-backed companies with EBITDA of $10 million to $50 million. Similarly, in November, Amalgamated Bank launched Amalgamated Capital, which will lend senior debt to LBO targets with EBITDA between $3 million and $20 million. U.S. Bancorp is expanding its leveraged finance practice and, in November Peter White, a former managing director at CIT, joined TD Bank, where as head of sponsor finance he is creating a group to finance deals for buyout shops.
* Although total issuance is expected to be a fraction of what it was in the boom years, collateralized debt obligation funds are showing signs of reemerging as a force for buying high-yield bonds and bank loans. In December, Citigroup Inc. underwrote and distributed a $250 million CLO for Silvermine Capital Management LLC, a Stamford, Conn.-based hedge fund, and on Dec. 16 Standard & Poor’s Leveraged Commentary & Data reported that Guggenheim Partners LLC was the lead investor in a $275 million CLO arranged by Wells Fargo & Co. and managed by NewStar Financial.