LSTA and LMA New York City Conference

On 18 May, the LSTA and LMA jointly hosted their New York City Conference.

Deborah Staudinger of Hogan Lovells then moderated the Private Credit Trends panel with Joshua Groman of MidCap Financial Services, Albert Lee of Crescent Capital Group, and Matthew Schernecke of Hogan Lovells. With the focus on direct lending, the panelists all agreed that direct lenders are benefiting from the slowdown in the BSL market. The primary attraction of executing a deal with direct lenders for borrowers was the better dialogue amongst borrower/sponsor and lenders, allowing lenders to be proactive and have that necessary conversation with the borrower well in advance of any liquidity shortfalls. Private credit has been growing steadily with $1.4 trillion AUM currently; and fortunately, it seems only to have been minimally impacted by the recent bank failures. But some are becoming more aggressive with credit agreement terms, with some deals including the option for borrowers to PIK interest rather than pay cash for interest payments. With some of the direct lending deals having 18-20 lenders, direct lenders may begin to focus more on voting provisions in the credit agreements, and thus it is possible for those provisions to evolve. However, the panelists seemed to think that a secondary market would run counter to the direct lenders value proposition of providing an opportunity for an easy conversation to ensue amongst the parties whenever needed.

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