Personal 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 yr, in accordance with 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 development this yr 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 economic system, with 78 per cent anticipating gradual development (0-2 per cent) over the subsequent 12 months and solely 10 per cent anticipating a recession.
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According to their outlook on the economic system, greater than two thirds (68 per cent) of debtors count on “modest” or “sturdy” income development this yr, whereas 74 per cent count on wholesome, natural earnings development.
In the meantime, the bulk (58 per cent) of personal fairness sponsors are seeing the pressures going through their portfolio firms as secure 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 virtually 80 per cent saying it’s extra probably than not.
The industries seen as most tasty by sponsors embrace industrial (29 per cent), enterprise companies (18 per cent) and healthcare (17 per cent).
Learn extra: Personal credit score defaults gradual 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. economic system – stay vigilant of ongoing macroeconomic challenges, their expectations for the latter half of the yr counsel a credit score market poised for development,” stated Timothy Lyne, chief govt of Antares Capital. “The information aligns with what we’re seeing throughout the vast majority of our portfolio, one of many largest and most numerous within the trade. Debtors, primarily throughout non-discretionary and extremely defensive sectors, proceed to exhibit sturdy fundamentals together with year-over-year income and EBITDA development albeit at a slower tempo.”
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