Loans-a-Plenty

Referring back to a recent post, here are some talking points about the market frenzy in how aggressive lenders have been recently:

• Corporate liquidity is at record levels;
• Interest rates continue to remain low; and
• Default rates are at record lows.

In reading several articles (none of which I will quote since they require me to pay for licensing and I am a cheap bastard), the following observations have been made:

• leverage multiples are up tremendously;
• covenant-less loans are appearing more often; and
• risk premiums have all but disappeared.

If this doesn’t indicate a pullback soon, I don’t know what will. It’s incredible how quickly we forget the past cycles and claim that “the world is different.” My advice, get the deals while these lenders have appetites bigger than their stomachs but make sure you have alternatives to support you if things go south.

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