Bankruptcies across Canada and the U.S. have started to tick up this year. As we approach the latter innings of this business cycle and credit conditions continue to tighten, things will likely get worse. This is bad news for Zombie corporations which are defined as firms that can pay the interest on their debt to […]
Sep 25, 2023
Good afternoon. Welcome to the fall session of Bond Capital Private Credit News. I’m sure you’re all wondering what the cost of debt is looking like this coming fall, and I’ve got a few comments on that. But before I get to that information, I’d just like to talk about the size of the market. […]
Continue ReadingAug 21, 2023
Good afternoon, I’m Davis Vaitkunas from Bond Capital and today I want to talk about alternative sources of financing and direct lending. Direct lending has been growing quite rapidly in this marketplace for a couple of different reasons. One is the fact that investors are interested in this space due to the attractive returns on […]
Continue ReadingJun 26, 2023
The Price of Time: The Real Story of Interest by Edward Chancellor, 2022Winner of the 2023 Hayek Book Prize Longlisted for the 2022 Financial Times Business Book of the Year Award In the beginning, was the loan in Mesopotamia, and that loan carried interest at 20%. During the 5,000 years prior to 1913, there was […]
Continue ReadingApr 25, 2023
Private Credit’s Time to Shine? The year 2022 proved to be challenging for fixed income investors, as interest rates rose and central banks tightened their monetary policies, leading banks to pull back and, in some cases, face failure. The slowing economy added to the stress, resulting in diminishing returns for assets. Furthermore, persistent high interest […]
Continue ReadingApr 11, 2023
Hello. My name is Davis Vaitkunas and this is the winter 2023 installment of Bond Capital TV. With the ongoing tricky macro we have a few insights for business loan borrowers and private credit direct landing investors to consider for 2023 and some comments on what’s getting done right now in business credit. Where we […]
Continue ReadingApr 11, 2023
I’m Davis Vaitkunas, and welcome to Bond Capital TV. A few sites and insights as we look forward into 2023. After a year of rising interest rates, high inflation, and lots of interlopers coming into our economy, we’ve all gonna be wondering what’s in store for us next. What we’re seein is more conservative banks, […]
Continue ReadingJan 16, 2023
The Benefits of a Private Credit Allocation for Investors Private credit can be a great investment option for investors seeking higher returns, diversification, and control. Firstly, private credit investments can offer higher returns compared to traditional investments such as stocks or bonds. This is because private credit investments often involve lending to companies or individuals […]
Continue ReadingDec 13, 2022
Investors who allocated to and rebalanced into Private Credit / Direct Lending have found one of the few bright spots this year. Public equities and public fixed income have declined in tandem leaving investors battered. Low correlation private credit looks to continue its recent performance for three reasons: Firstly, large asset managers are rebalancing their […]
Continue ReadingJun 15, 2022
The Goal by Eliyahu M. Goldratt, North River, 1984 Don’t let its publication date fool you The Goal has long been, and remains to this day, one of the 25 most influential business management books according to Time. Most interesting is that Goldratt was a physicist and not from the normal circles of business book […]
Continue ReadingMay 16, 2022
Private Credit – an Inflation Antidote? So far this year many investment classes have suffered sustained losses. Inflation has risen to cycle highs and the S&P 500 is down nearly 20% while the Bloomberg Global Aggregate Bond Index has lost $2.6 trillion, a record slide from its high in 2021. The last time a drop […]
Continue ReadingSep 15, 2021
This summer Bond Capital went back to school on interest rates. A 400bps increase in interest rates would hurt borrowers, including the government. A move of this magnitude is highly unlikely if you believe the bond market. It is pricing in an eventual 200-plus basis point increase in the Bank of Canada’s key lending rate […]
Continue ReadingJun 29, 2021
Creativity, Inc. Overcoming the unseen forces that stand in the way of true inspiration. By Ed Catmull and Amy Wallace, Transworld Publishers Ltd., 2014 Saying you are creative doesn’t make you creative. Creativity, Inc. is a book for managers about how to build a creative culture. As Pixar co-founder and president Ed Catmull writes, “An […]
Continue ReadingMay 27, 2021
What is Private Credit Private credit is the provision of loans (credit) in private markets from a non-bank party where the debt is not issued or traded on the public markets. To understand the basis of it, one must appreciate the nature of private markets and the nature of the credit being provided in those […]
Continue ReadingFeb 26, 2021
During last month’s webinar, Bond Capital Private Credit together with its friends from Goldman Sachs and Deloitte discussed the current market for private capital, deal flow and trends. Below are the main takeaways: K-Shaped Recovery COVID-19 has divided the economy into two subsets. On the higher end of the spectrum is the performing “Market Darling”, […]
Continue ReadingDec 2, 2020
This year, for the first time since World War II, the United States will owe more than its economy can produce¹. This is because in response to the COVID-19 crisis, the US Federal Reserve (the “Fed”) lowered its policy rate back to near zero and introduced liquidity through a series of credit facilities, such the […]
Continue ReadingSep 29, 2020
Leading pension funds moved into private markets years ago, and most other institutional investors (pensions, endowments, foundations etc.) are starting to follow. However, many pension funds, family offices, high net worth individuals, and money manager allocations have still barely considered moves into private markets. Global pension funds moved en masse into private equity in the […]
Continue ReadingAug 13, 2020
Global interest rates are near zero and, with massive amounts of quantitative easing by central banks, interest rates are poised to remain low for a sustained period of time. The downward force on interest rates looks to be sustained by continued efforts by central banks, a lack of consumer and business demand in a COVID-19 […]
Continue ReadingJul 14, 2020
The North American economy has experienced a prolonged expansion since the last US contraction during the Great Financial Crisis (“GFC”). After more than 10 years of expansion, COVID-19 has tipped the credit and economic cycle into contraction. As the second time in the last 10 years that we’ve seen zero interest rate policies from central […]
Continue ReadingMay 20, 2020
In the shadow of a global pandemic with 20.5 million people sidelined at the end of April 2020, the U.S. Labor Department reported a record 14.7% jobless rate, the European Commission released projections of Europe’s worst recession in history, India’s unemployed topped 120 million and yet the S&P is close to all-time highs. Wow! Experience […]
Continue ReadingFeb 14, 2020
Extending is Pretending in 2020 Trying to extend the longest U.S. expansion in 150 years without much economic capacity left to go will be stressful. The global debt-to-GDP ratio recently hit an all-time high at 322%. Total global debt sits at US$253 trillion, according to a report released by the Institute of International Finance (IIF). […]
Continue ReadingDec 27, 2019
Interest rates have been declining for nearly 40 years. There are many factors driving the current low interest rate environment: central banks trying to stimulate their economies and or stave off recession; muted inflation; weak global growth; protectionism; ongoing geopolitical uncertainty; aging populations; and the demand for traditional fixed income outstripping supply.
Continue ReadingDec 27, 2019
After nine interest rate increases since December 2015, the US Federal Reserve lowered the rate for the first time in July this year, followed by another deduction in September. Both the long-term and short-term interest rates are now at an almost 5,000-year historical low
Continue ReadingMar 27, 2019
What is a Management Buyout (MBO)? Management Buyout is a transaction where the management team is involved in the acquisition in part or all of the business they manage. Financing sources of an MBO transaction may be obtained from a combination of personal funds, bank loan, equity finance, seller finance, and mezzanine finance.
Continue ReadingSep 6, 2018
Business owners today can take their strong balance sheets and earnings to senior banks or other capital providers to begin discussions on improving their borrowing terms. To be recession ready, ask for:
Continue ReadingMar 6, 2018
Since February 3, 2018, when Jerome Powell succeeded Janet Yellen as the US Federal Reserve Chairman, the Fed has been poised to be more aggressive in raising interest rates from 3 to 4 times in 20181. We compare the Risk/Reward (Figure 1) benchmark curve (May 2005)2 against the 0% policy curve (Oct 2014) and the Current […]
Continue ReadingDec 13, 2017
Looking Back: Institutional lenders have been adding money supply to the credit market, reducing interest rates on Middle Market loans Looking Around: The Upper Middle Market is benefitting the most from this borrower-friendly market. Looking Forward: The lower Middle Market may expect debt pricing to increase. Capital continues to flow into institutional leveraged loan funds, […]
Continue ReadingSep 13, 2017
We are moving away from an era of cheap capital. The US Federal Funds rate has increased by 25 Basis Points four times since December, 2015. The Bank of Canada overnight rate has had two hikes of 25 Basis Points in 2017.
Continue ReadingMar 9, 2017
Unitranche Debt Definition | Investopedia Unitranche debt is a type of debt that combines senior and subordinated debt into one debt instrument; it is usually used to facilitate a leveraged buyout. The borrower would pay one interest rate to one lender, and the rate would usually fall between the rate for senior debt and subordinated […]
Continue ReadingJun 9, 2016
McKinsey Global Institute published a report focusing on the total debt oustanding pre- and post- 2008 financial crisis. Since the Great Recession, instead of de-risking and deleveraging globally, corporations have accrued more debt on their balance sheets and allowed their credit ratings to downgrade. Bond Capital believes that rising debt is related to quantitative easing by central banks around […]
Continue ReadingSep 9, 2015
In prior articles, Bond Capital has used US high yield benchmarks as a proxy for riskier private debt, but what about in Canada? The yield on Canadian bonds continues to decline, and recent rate cuts by the Bank of Canada may cause them to stay low longer. Market speculation is that the US Federal Reserve […]
Continue ReadingMar 9, 2015
High yield credit spreads are on the rise. Is this a trend or a blip? The current high yield index is still low when compared to the 15 year average of just under 10%. However, when looking at the 10 year decline in US bond yields over that same period, along with the recent uptick […]
Continue ReadingJan 9, 2015
As active investors in Western Canada we cannot help but pay close attention to energy prices. Over the last four months, oil prices have come off significantly and many investors are still grappling with the impact this will have on the Western Canadian economy. Cheap oil would normally boost the US economy, but 30 year […]
Continue ReadingMay 9, 2014
Bond Capital’s seasonal credit commentary: As an alternative investor who structures, arranges and funds subordinated debt, mezzanine capital and equity investments, we are keenly interested in the rate of return on capital. Here, Bond Capital will compare the high yield bond market and the mid-market Canadian Bank debt market. Due to the limited information available on Canadian high […]
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