Non-public fairness sponsors and debtors are cautiously optimistic about their portfolios and anticipate M&A exercise to select up within the second half of the yr, in line with a brand new Antares survey.
The $68bn (£52.4bn) different asset supervisor’s inaugural credit score market outlook survey discovered that almost all of respondents anticipate wholesome natural income development this yr and fewer stress throughout their portfolios.
The survey, which polled non-public fairness sponsors and Antares debtors from a variety of industries, discovered that almost all of debtors anticipate a ‘smooth touchdown’ for the US economic system, with 78 per cent anticipating sluggish development (0-2 per cent) over the subsequent 12 months and solely 10 per cent anticipating a recession.
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In keeping with their outlook on the economic system, greater than two thirds (68 per cent) of debtors anticipate “modest” or “robust” income development this yr, whereas 74 per cent anticipate 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 steady in comparison with 2023, with 21 per cent seeing reducing strain.
And most sponsors anticipate to accumulate a enterprise through the second half of 2024, with virtually 80 per cent saying it’s extra seemingly than not.
The industries seen as most tasty by sponsors embody industrial (29 per cent), enterprise providers (18 per cent) and healthcare (17 per cent).
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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 unlock capital.
“Our survey signifies that whereas non-public 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 recommend a credit score market poised for development,” mentioned 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 various within the trade. Debtors, primarily throughout non-discretionary and extremely defensive sectors, proceed to exhibit robust fundamentals together with year-over-year income and EBITDA development albeit at a slower tempo.”
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