標(biāo)普全球-私人信貸爭(zhēng)取違約后的時(shí)間 Buying Time Post-Default with Private Credit 2023

S&PGlobal

BuyingTimePost-DefaultwithPrivateCredit

December2023

|?2023S&PGlobal.Allrightsreserved.

Authors

Primaryauthors

EvanGunter,Director,S&PGlobalRatingsCreditResearch&Insights,evan.gunter@

NicoleSerino,Director,S&PGlobalRatingsCreditResearch&Insights,nicole.serino@

DylanThomas,PrivateEquityReporter,S&PGlobalMarketIntelligence,dylan.thomas@

IljaHauerhof,DirectorNewProductDevelopment–PrivateMarkets,S&PGlobalMarketIntelligence,ihauerhof@

Secondaryauthor

RuthYang,ManagingDirector,GlobalHeadofThoughtLeadership,S&PGlobalRatingsResearch&Insights,ruth.yang2@

Contributors

DiegoCastells,Editorial,Design&Publishing

MahnoorHaider,Editorial,Design&Publishing

Thisreport,byS&PGlobalRatingsandS&PGlobalMarketIntelligence,isathoughtleadershipreportthatneitheraddressesviewsonindividualcreditratingsnorisaratingaction.S&PGlobalRatingsandS&PGlobalMarketIntelligenceareseparateandindependentdivisionsofS&PGlobal.

KeyTakeaways

–Wereviewedmorethan1,200defaultsofpublicly-ratedissuerssince2008tobetterunderstandtheimpact

thatprivatecreditcanhaveondefaulters.

–Weobservedamodestlyhighershareofselective

defaults(andrepeatdefaults)amongdefaulterswithprivatecreditfundingthanamongthosewithout.

–Notably,wefoundasomewhatshorteraveragetimebetweendefaultsforthoserepeatdefaulterswithprivatecreditfundingthanwithout.

–However,weobservedfewerrepeatdefaultsanda

longeraveragetimebetweendefaultsfromissuers

thatreceivedprivatecreditforrestructuringpurposesthanfromthosethatreceivedprivatecreditforotherpurposesorthosewithoutprivatecredit.

Reporttitle|2

Introduction

Higher-for-longerinterestratespresentachallengeforborrowersthathavegrown

accustomedtothehistoricallylowratesofthepastseveralyears.S&PGlobalRatings

reportsthatglobalcorporatedefaultshavenearlydoubledthisyear—with127defaults

globallythroughOctober—evenasdefaultratesremainjustabovetheirlong-term

averagelevels.Distressedexchangesandrepeatdefaultsarecontributingtothistotal.

Forborrowersstrugglingwithcashfloworliquidityconcerns,financingconditionsremain

particularlychallenging,withbroadlysyndicatedloanissuanceatitslowestlevelthrough

Septembersince2010,accordingtoLCDPitchbook,and‘CCC’categorybondissuanceat

itslowestsince2008.

Amidtheslowdown,manyborrowersareturningtoprivatecreditforfundingoptions.

Tobetterunderstandhowthegrowinginvolvementofprivatecreditmayaffect

futuredefaults,wereviewed1,232defaultsthattookplacebetweenJan.1,2008,and

March31,2023,from979issuersthatwerepubliclyratedbyS&PGlobalRatingsinthe

USandEurope.Theseincludemanyre-defaulters,orrepeatdefaulterswithmorethan

onedefaultduringthisperiod.UsingprivatedebtdealsdatafromPreqinPro,wethen

identifiedasubsetof97ofthesedefaults(from81issuers)whereissuershadreceived

privatecreditfundingwithinayearandhalfbeforeorafterthedefault.

Reporttitle|3

ofdefaults

werefollowedbyarepeatdefault

ofdefaults

werefollowedbyarepeatdefault

22%

1.8

years

averagetime

betweendefaults

averagetime

betweendefaults

22%

29%

20%

Theaveragetimebetweendefaultsforrepeatdefaulterswas

shorterforissuersthatreceivedprivatecreditthanforthosethatdidnot

PrivateCreditandDefaults

Defaulterswith

privatecreditfunding

Defaulterswithout

privatecreditfunding

Selectivedefaultsweremorecommonamongprivatecreditborrowersthatdefaulted

50%ts43%ts

Repeatdefaultswereslightlymorecommonamongprivatecreditborrowers

25%

2.2

years

Privatecredit

(ex.Restructuring)

Noprivate

creditfunding

PrivatecreditRestructuring

Butrepeatdefaultswerelesscommonamong

borrowersreceivingprivatecredittofundrestructuring.

Andforthoseissuersthatdiddefaultagain,thosereceivingprivatecredit

forrestructuringaveragedalongertimebetweendefaults

1.1

years

3.1

years

2.2

years

Basedonananalysisof1,232defaultsthattookplacebetweenJan.1,2008,andMarch31,2023,fromissuersin

theUSandEuropethatwerepubliclyratedbyS&PGlobalRatings,includingasubsetof97defaultsfromissuers

thatreceivedprivatecreditfunding.

Sources:PreqinProandS&PGlobalRatingsCreditResearch&Insights.

Reporttitle|4

Whatdifferencecanprivate

creditmakefordefaulters?

Weobservedahighershareofselectivedefaultsamongdefaulterswithprivatecredit

fundingthanamongthosewithoutprivatecreditfunding.Halfofthedefaultsfrom

issuerswithsomeprivatecreditfunding(50%)wereselectivedefaults,comparedwith

43.2%ofthedefaultsfromissuerswithnoprivatecreditfunding.

Privatecredit

borrowerstendto

workcloselywitha

smallnumberofdirectlenders,whichmeansfewerpartieswouldbeinvolvedinadistressedexchangenegotiation.

Manyfactorsmayswayaborrowerunderduresstopreferanout-of-courtrestructuring

overatraditionalbankruptcyorageneralpaymentdefault.Apartfromkeepingcontrol

oftheentity,theissuercanalsoavoidpotentiallyalongandcostlybankruptcyand

preservemoreofitsassetvalue.However,thesuccessofadistressedexchange

dependsontheborrower’sabilitytoreachanagreementontermswiththelenderto

avoidageneraldefault.

Privatecreditborrowerstendtoworkcloselywithasmallnumberofdirectlenders,

whichmeansfewerpartieswouldbeinvolvedinadistressedexchangenegotiation.

Whileprivatecreditisanotherpillaroffundingintheleveragedfinancemarket,along

withspeculative-gradebondsandbroadlysyndicatedleveragedloans,therearesome

characteristicsthatsetitapart.Privatecreditborrowershavetendedtobesmaller

(oftenwithEBITDAof$25millionto$100million,oftenwithsimplerdebtstructures,

includingunitranche)andthedealshavefewerlenders.Frequentlytheseareborrowers

backedbyprivateequitysponsors.Notably,withthegrowthoftheprivatecreditmarket

andtheriseofclubdeals(thatinvolveasmallgroupoflenders),largerborrowerswith

moreinvolvedtransactionshavetappedtheprivatecreditmarket.

Chart1

Selectivedefaultsaccountedforhalfofthedefaultsfrom

privatecreditborrowers(%)

Privatecreditfunding

Noprivatecreditfunding

SDD

4848

488

641

Basedonananalysisof1,232defaultsthattookplacebetweenJan.1,2008,andMarch31,2023,fromissuersintheUSand

EuropethatwerepubliclyratedbyS&PGlobalRatings.

SD=selectivedefaults.

Basedonthenumberofdefaults.

Defaultswheretheissuerratingwasloweredto'R'havehavebeengroupedwith'D'.

Sources:PreqinProandS&PGlobalRatingsCreditResearch&Insights.

?2023S&PGlobal.

Reporttitle|5

Withprivatecreditfunding

Noprivatecreditfunding

Repeatdefaultswereaboutascommonamongborrowerswithprivatecreditasthose

without.Normally,repeatdefaults(orre-defaults)aremorecommonfollowingaselective

default(suchasadistressedexchange)thanfollowingageneraldefault.However,we

observedalesspronounceddifferenceintheshareofre-defaultsamongdefaulterswith

andwithoutprivatecreditfunding.Eventhoughselectivedefaultsweremorecommon

amongthosewithprivatecredit,weobservedrepeatdefaultsafter25%ofthedefaultsof

issuerswithprivatecredit,justthreepercentagepointshigherthanamongthosewithout

privatecredit.

Weobservedrepeat

defaultsafter25%of

thedefaultsofissuers

withprivatecredit,

justthreepercentage

pointshigherthan

amongthosewithout

privatecredit.

Withfewerlendersinvolved,andwithtypicallyfewercreditorclassesinvolved,there’s

moreroomforlenderandborrowertobealignedtowardreducingtransactionalcosts

andtoexecuteefficientrestructurings,whichpreservesenterprisevalue.Incases

whereaborrowerisunderstress,directlenderscanworkcloselywiththeprivatecredit

borroweronadebtworkout,whereaborrowerwithbroadlysyndicatedloansmayhave

todealwithseveralborrowersandclassesandincentivesofmultiplecreditorclasses.

Whentheincentivesofthedirectlenderandtheborrowerarealigned,thelendermay

makeconcessionssuchaswaivingcovenantdefaultsorallowingforpayment-in-kind

(PIK)inplaceofcashinterestpayments.Thiscanbuytimeforaportfoliocompanyto

weatheritsstormandgettosurerfootingtomeetitsfinancialobligations.

Privatecreditisoftenusedtofundprivateequity-sponsoredcompanies.Thesedeals

cantakemanyforms,includingfundingforgrowthopportunities,strategicacquisitions,

andrestructuringsaswellasleveragedbuyoutsanddividendrecaps.Whilethesedeals

canprovidecapitalforgrowthandexpansion,financialsponsorslooktomaximizetheir

returnsbyadoptinghighlevelsofleverageforportfoliocompanies.S&PGlobalRatings

assumesafinancialsponsor-ownedcompanytobehighlyleveragedunderourcriteria.

Ifaborrowerisloadedwithanunsustainablelevelofdebt,weakeningitsabilityto

navigateunforeseenchallenges,itmaybelefttreadingwaterbeforeaneventual

default…ordefaults.

Chart2

Slightlymorerepeatdefaultswereobservedamongborrowerswith

privatecredit

Follow-ondefaultNofollow-ondefault

24

250

879

72

Basedonananalysisof1,232defaultsthattookplacebetweenJan.1,2008,andMarch31,2023,fromissuersintheUSand

EuropethatwerepubliclyratedbyS&PGlobalRatings.

Basedonthenumberofdefaults.

Sources:PreqinProandS&PGlobalRatingsCreditResearch&Insights.

?2023S&PGlobal.

Reporttitle|6

Amongthedefaultersthatwereviewed,wefoundseveralsuchexamples.

Oneexampleofaborrowerthatranintofinancialdifficultiesthatledtomultipledefaults

afterittookontoomuchdebtwasDavid’sBridal.

David’sBridalfiledforbankruptcyin2018inarestructuringthaterasedroughly

$400millionindebtfromitsbooksandturnedownershipovertoitslenders.Existing

lendersalsocontributednewdebtfinancingtosupporttheturnaround.However,a

subsequentdefaultfollowedfiveyearslater.

David’sBridalfiledforCh.11bankruptcyprotectioninApril2023,whichresultedin

ano-cashbankruptcysaleinJulyputthechaintobusinessdevelopmentcompany

CIONInvestmentCorporation.Cion’sacquisitionincludedtheassumptionofcertain

bankruptcy-relatedliabilitiesandaninvestmentof$20millionintothebusiness,and

enabledthecompanytoavertatotalshutdown,with195stores(fromabout300)

remainingopen.

Anothersuchexample,S&PGlobalRatingsloweredtheissuercreditratingto‘D’in

April2019oftelecommunicationscompanyFusionConnect,Inc.afteritfiledforCh.11

bankruptcy.Ayearearlier,Fusionhadborrowed$680milliontofundreversemergers

withBirchCommunicationsHoldings,Inc.andMegaPathHoldingCorporationin2018,

butrevenuegrowthpost-mergerfellwellshortofprojections.

Thisrestructuringwiped$400millionindebtfromFusion’sbooksandbroughta

$115millionexitfinancingloan.ItalsoplacedFusion’sformerlendersasitsnewowners.

Despitethisrestructuring,Fusioncontinuedtostruggle.Fusionconducteda

subsequentdistressedexchangeinJanuary2022,withadebtforequityswapthatmade

MorganStanleyPrivateCreditthecompany’smajorityowner.

Fusion’sdistressedexchangein2022isoneexampleofatrendwe’veobservedofthe

increaseindistressedexchangesasashareofdefaults.Since2008,S&PGlobalRatings

hasdetectedamarkedincreaseinthepercentageofdistressedexchangesasashare

ofdefaults.Halfofdefaultsin2022,andover40%ofdefaultsthisyearthroughOctober,

havebeendistressedexchanges,andthisisupfromarangeof20%-30%in2010-2014.

Reporttitle|7

Chart3

Distressedexchangesnowoftenaccountformorethan40%ofdefaults

DistressedexchangesDistressedexchange(%oftotaldefaults)

120

60%

100

50%

80

40%

60

30%

40

20%

20

10%

0

0%

2008200920102011201220132014201520162017201820192020202120222023*

DataasofOct.31,2023.

*YeartodatethroughOctober2023.

DistressedExchangesincludepublicly-ratedissuersgloballywithratingsloweredto'SD'.

Datafortotaldefaultsincludesdefaultsofconfidentialissuers.

Source:S&PGlobalRatingsCreditResearch&Insights.

?2023S&PGlobal.

Thismattersbecausearisingshareofdistressedexchangesmayindicatefuture

defaultpressure.We’veobservedthatre-defaulters(orissuerswithmultipledefaults)

werenearlyfivetimesmorelikelyafteraselectivedefault(suchasafteradistressed

exchange)thanafterageneraldefaultwithina48-monthperiodpost-default.

S&PGlobalRatingsfoundinARiseInSelectiveDefaultsPresentsASlipperySlope,

June26,2023,thatrepeatdefaultsoccurredafterabout34.9%ofdistressedexchanges

withina48-monthperiod.

Thegrowingprevalenceofdistressedexchangesamongdefaultscouldleadto

moredefaultsonthehorizonincaseswheretheborrower’sdebtpositionremains

unsustainablefollowingtheexchange.

Buyingtimewithprivatecredit

Amongthere-defaulters,thetimetodefaultbetweentheinitialdefaultandthe

subsequentdefaultcanvarysubstantially.Atthelongend,ahandfulofthere-defaulters

lastedmorethan10yearsbetweendefaults,whileattheshortend,afewborrowershad

lessthan20daysinbetweendefaults.

Insomecaseswherethereislittletimebetweendefaults,aninitialselectivedefault

canbeatriggerthatleavestheborrowerwithfewalternativesbesidesabankruptcy

restructuring.OneexampleofthisisHouseofFraser(UK&Ireland).

Reporttitle|8

Total(ofre-defaulters)

(N=274)

ThecompanyconductedadistressedexchangeonJuly30,2018,thatresultedinthe

withdrawalofanofferbyC.Bannertoacquireamajoritystakeinthefirminadealthat

wouldhaveprovidedcashequityrelief.HouseofFraserisoneofthedefaultersforwhich

wehavenorecordthatitreceivedprivatecreditfunding,andonceC.Banner’sdealwas

offthetable,HouseofFraserwasleftfacingheightenedliquidityandinsolvencyriskas

itwasconfrontedbyalackoffundingoptions.HouseofFrasersubsequentlyentered

itsoperatingsubsidiariesintoadministration11dayslater,onAug.10,2018.Through

thispre-packagedbankruptcy,itagreedtoasaleofthecompanytoSportsDirect(now

FrasersGroup).

Amongthere-defaulters

weobserved,the

averagetimebetween

defaultswasabout2.2

yearsforthosewithoutprivatecredit,versus

about1.8yearsforthosewithprivatecredit.

Wefoundasomewhatshorteraveragetimebetweendefaultsforre-defaulterswith

privatecreditfundingthanwithout.Thisshortertimebetweendefaultscouldreflect

firmswithdebtstructuresthataretooaggressiveorevenunsustainable.Amongthe

re-defaultersweobserved,theaveragetimebetweendefaultswasabout2.2yearsfor

thosewithoutprivatecredit,versusabout1.8yearsforthosewithprivatecredit.The

mediantimebetweendefaultswassomewhatshorter,closerto1.1yearsforborrowers

withprivatecreditversus1.5yearsforthosewithout.

Thereareafewcharacteristicsofprivatecreditthatcouldcontributetothisshorter

timebetweendefaults.First,thereisthehigherconcentrationofprivateequitysponsors

andleveragedbuyoutsamongprivatecreditborrowersthatcancorrespondwith

moreaggressivefinancialprofiles.Anotherpotentialfactorisfinancialmaintenance

covenants,whicharemorecommonamongprivatedebtthanamongbroadlysyndicated

loans.Thesecovenantscanserveasanearlywarningsystemforalenderthattheircredit

isintrouble,potentiallyheighteningtheneedtoarrangearestructuringsoonerrather

thanlater.

Chart4

Re-defaultstendedtooccursooneramongprivatedebtborrowers

Withprivatecreditfunding

(N=24)

Noprivatecreditfunding

(N=250)

MedianAverage

00.511.522.5

Yearstosubsequentdefault

Basedonananalysisof1,232defaultsthattookplacebetweenJan.1,2008,andMarch31,2023,fromissuersintheUSandEuropethatwerepubliclyratedby

S&PGlobalRatings.

N=Numberofdefaults.

Sources:PreqinProandS&PGlobalRatingsCreditResearch&Insights.

?2023S&PGlobal.

Reporttitle|9

29

Re-defaultswere

lesscommonamong

thoseissuersthat

receivedprivatecredit

forrestructuring

purposesthanamong

otherentities.

However,eventhoughthetimebetweendefaultsforre-defaulterswithprivatecreditis

shorterthanforthosewithnoprivatecreditfunding,weseevariationsemergebasedon

thedealtypeforthefundingthatwasreceived.

Re-defaultswerelesscommonamongthoseissuersthatreceivedprivatecreditfor

restructuringpurposesthanamongotherentities,includingthosethatreceivedprivate

creditforotherpurposes,aswellasthosewithoutprivatecredit.

Inthesecases,theworkbetweenborrowerandlendertoarrangerestructuring

fundingmaybeabletohelpputaborroweronstrongerfootingtoweatheradifficult

period.Oneexampleofsuchaturnaround,GibsonBrands,Inc.,manufacturerofsome

oftheworld’sbest-knownelectricguitars,turnedtoprivatedebtafterdeclaringCh.11

bankruptcyinMay2018.Therestructuringdealallowedlenderstoswapdebtforequity,

whichallowedoneofthefirm’slargestdebtholders,KKR&Co.,totakecontrolofthe

company.Gibsonexitedbankruptcylessthansixmonthsafteritsdefaultin2018andhas

notsubsequentlydefaulted.

Chart5

Repeatdefaultswerelesscommonamongborrowersreceivingprivate

creditforrestructuringpurposes(%)

PrivatecreditRestructuring

(N=40)

Noprivatecredit

(N=1129)

PrivatecreditOtherpurposes

(N=56)

20

22

05101520253035

Percentofentitiesdefaultingagain

Basedonananalysisof1,232defaultsthattookplacebetweenJan.1,2008,andMarch31,2023,fromissuersintheUSand

EuropethatwerepubliclyratedbyS&PGlobalRatings.

Basedonthenumberofdefaults.

Sources:PreqinProandS&PGlobalRatingsCreditResearch&Insights.

?2023S&PGlobal.

Whileasponsormaymakeaninjectionoradirectlendermayextendloansfor

restructuringtohelpacompanygetbackonfirmfooting,thesuccessofsuch

contributionsisnotguaranteed.

Onesuchexampleisfromanissuerwithmultipledefaultsasitstruggledtoadaptina

changingmarketplace.Eventheinvolvementofatrioofprivatemarketplayersinthe

2010Ch.11bankruptcyrestructuringofsupermarketoperatorTheGreatAtlantic&Pacific

TeaCompany,Inc.wasnotenoughtostaveofffuturedefaults.

Reporttitle|10

AftertherestructuredA&Pemergedfrombankruptcyasaprivatecompanyin2012,it

declaredCh.11bankruptcyasecondtimein2015andclosedforgoodinNovember2016.

Ultimately,thecompanycitedthecostofitsheavilyunionizedlaborforceasreasonfor

thesecondbankruptcy,evenasithadalsobeenlosingmarketsharetocompetitorsasit

struggledtoadaptinthehighlycompetitivegroceryspace.

However,amongthe

issuerswithrepeat

defaults,thosethat

receivedprivatecreditforrestructuringlastedlongerbetweendefaultsthanotherborrowers.

However,amongtheissuerswithrepeatdefaults,thosethatreceivedprivatecredit

forrestructuringlastedlongerbetweendefaultsthanotherborrowers.Those

re-defaulterswithprivatecreditforrestructuringaveragedjustoverthreeyearsbetween

defaults,comparedwithtwoyearsbetweendefaultsforthosewithnoprivatecredit,and

nearertooneyearforthosereceivingprivatecreditforotherpurposes.

Chart6

Borrowerswithprivatecreditfundingforrestructuringlastedlonger

betweendefaults

Privatecredit

Restructuring

(N=8)

Noprivatecredit

(N=250)

Privatecredit

Otherpurposes

(N=16)

00.511.522.533.5

Yearstosubsequentdefault

Basedonananalysisof1,232defaultsthattookplacebetweenJan.1,2008,andMarch31,2023,fromissuersintheUSand

EuropethatwerepubliclyratedbyS&PGlobalRatings.

N=Numberofdefaults.

Sources:PreqinProandS&PGlobalRatingsCreditResearch&Insights.

?2023S&PGlobal.

ThemostpronouncedexampleofthiswasluxurydepartmentstoreBarney’sNewYork,

whichdefaultedthroughadistressedexchangein2012thatturnedcontrolofthefirm

overtoprivateequityfirmsYucaipaCos.andPerryCapitalinadealthatreducedthe

DuringtheheightoftheCOVID-19pandemic

in2020,privatecredit

lenderswerewillingto

makeconcessionsor

contributeadditional

fundingtotheir

portfoliocompaniestoallowtimeforbusinessconditionstoimprove.

firm’sdebtbyover90%.Barney’swasabletosurviveforsevenmoreyearsbeforeit

subsequentlyfiledforCh.11Bankruptcyin2019andliquidatedin2020.

Inthebestoutcomes,acontributionofnewcapitalforrestructuringfromthePEsponsor

oradditionalloansfromneworexistinglenders,helpstheborrowermeetliquidity

andcapitalneedsandgivesitsomerunwaytoweatherthestormuntilbusinessand

economicconditionsimprove.

DuringtheheightoftheCOVID-19pandemicin2020,privatecreditlenderswerewilling

tomakeconcessionsorcontributeadditionalfundingtotheirportfoliocompaniesto

allowtimeforbusinessconditionstoimprove.Asthatperiodwoundupbeingoneofthe

shortest(andsteepest)recessionsonrecord,thingsreturnedtonormalcyverysoon.

Reporttitle|11

($bln)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023*

However,themacroeconomiclandscapeischanging,withbothborrowersandalternative

investmentmanagerspotentiallychallengedbyhigher-for-longerinterestrates,coupled

withthespecterofslowinggrowth.Insuchascenario,privateequityfirmscouldfind

themselvesinapositionwheretheyneedtochoosewhichoftheirexistingportfolio

companiestosupport.Fortheprivatecreditlenders,theymayhavetograntmore

concessions;wearealreadyseeingmoreinstancesofeitherpushbackofmaturitiesand

classesdeferringinterest.

Thatsaid,plentyofprivatecreditdrypowderremainsonthesidelines.

Privatecreditfirms

currentlyhavemore

than$400billionin

drypowderaccording

toPreqinPro.Of

this,$150billion

isearmarkedfor

distressedinvestments

andspecialsituations.

Privatecreditdrypowdermay

provideasourceoffundingfor

strugglingborrowers

Drypowderavailableforprivatecreditlendinghasswelledasinvestorshaveincreased

allocationstoprivatecreditfunds.Whilethisdrypowderservesasasourceoffunding

fornewdealsandnewinvestments,privatecreditfundsmayalsoholdsomeofthisin

reserveforreinvestmentinstrugglingportfoliocompanies.Privatecreditfirmscurrently

havemorethan$400billionindrypowderaccordingtoPreqinPro.Ofthis,$150billionis

earmarkedfordistressedinvestmentsandspecialsituations,providinglenderswitha

warchesttohuntforopportunitiesorsupportchallengedportfoliocompaniesshould

creditconditionsweaken.

Chart7

Privatecreditdrypowdermayprovideasourceoffundingfordistressedborrowers

500

450

400

350

300

250

200

150

100

50

0

DistressedandspecialsituationsPrivatecredit(excludingdistressedandspecialsituations)

DataasofSept.30,2023.

*September2023.

Drypowderheldbyprivatecreditfundsgloballyasofyearend,excludingfundoffunds.

Source:PreqinPro.

?2023S&PGlobal.

Reporttitle|12

Thispoolofdrypowdercouldbeacriticalsourceoffundingforborrowersthatare

strugglingtonavigateheadwindsofhigherinterestratesandchallengingfinancing

conditions.Forcompaniesontheprecipiceofdefault,liquidityiscritical.Theavailability

offunding,suchasthroug