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In a “Scary” Economy, Relationships and an “Unnatural” Approach Matter

Observations from the LPC Middle Market, Direct Lending & Large Corporate Loans Conference

I recently attended the LPC Middle Market, Direct Lending & Large Corporate Loans conference in New York City, where bankers, investors, and borrowers gathered to discuss the most important issues facing the private credit and syndicated loan markets. The presenters and panelists focused a lot on the current state of the economy and its impact on lending, but two themes emerged throughout the conference: It’s a scary world with a lot of uncertainty, and relationships matter. Additionally, to get the deal done, panelists suggested you might have to do something “a little unnatural.”

According to many panelists, the financial world is currently “scary”. Interest rates remain high, yet many economic indicators still don’t indicate a downturn. Investors have a lot of cash to put to use, however there aren’t as many deals happening, either from a new issuance or restructuring standpoint. Because of these factors, the financial world is facing uncertainty it hasn’t faced in a long time. Many panelists indicated that the problem isn’t high rates, it’s not knowing what interest rate we may be facing tomorrow, a year from now, or five years out.

Given this uncertainty, relationships are more important than ever. It’s uncertain how market conditions may impact returns you and your deal partners experience over the life of a transaction. Knowing how a partner will behave in uncertainty is reassuring when proceeding with a transaction.

Finally, panelists acknowledged that there are opportunities to make transactions happen, but you might have to do something a little unnatural. This part resonated the most with me. As an impartial third-party agent, we don’t dictate the structure of your deal. However, we do tailor our solution to the intricacies of your specific needs.

Every time we’re approached to consider an administrative agent or collateral agent opportunity, we know it will be similar to but different from every transaction we’ve supported before. We’re used to always considering the “unnatural”, approaching every deal from a commercial standpoint and offering deal participants a solution that supports the uniqueness of the transaction. We also develop long-standing relationships with our clients, so you know who we are and how we act across the life of your transaction.

As you navigate your way through this uncertain world, and decide to delve into the “unnatural”, know that your agent is willing to traverse that world along with you, as we’re used to seeing something different in every, unique transaction.

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