Daily Update: October 18, 2021

Start each business day with our analyzes of the most pressing developments affecting the markets today, along with a curated selection of our latest and most important news on the global economy.

Credit investors, seeking yield wherever they can find it, are increasing their investments in private debt markets, despite the perceived risks of transparency and illiquidity.

Investments in private debt markets increased increased tenfold in the last 10 years, alongside a fourfold increase in the corporate debt market. According to Preqin, a financial data provider, the private debt market has reached $412 billion in assets under management, with an additional $150 billion of capital available for new investments. Private debt is typically priced at a premium over syndicated debt, a nod to the lack of leverage, ratings and liquidity guidelines. As the private debt market has grown, it has become more sophisticated, including introduction of ESG measurement.

Private debt markets developed in the wake of the great financial crisis of 2007-2008. As banks struggled to reduce their exposure to riskier forms of debt, non-bank financial institutions stepped in to provide credit. The higher yields attracted some institutional investors. This increased interest has led to more borrowers and private equity sponsors enter the market. Because of illiquidity of the private debt marketinvestors in this market should generally adopt a buy and hold strategy.

A strong market for corporate debt means that most large corporations can meet their financing needs through syndicated markets. Private borrowers tend to be small and medium enterprises with an EBITDA between 3 and 100 million dollars.

Most private debt does not receive a public rating, but S&P Global Ratings assigns credit estimates to nearly 1,400 private market debt issuers held by middle market loan-backed bonds (CLOs). Approximately 75% of these credit estimates, awarded between 2017 and 2019, for CLO of the private debt market had a score of ‘b-‘. In the heavily syndicated CLO market, only about 20% achieved a similar score.

While private debt carries greater risk and tends to have less liquidity than syndicated markets, investors and borrowers have been drawn to the increased yield and closer relationships that private debt can offer. Some market watchers fear that further expansion of this market will lead to a decline in the quality of underwriting. Due to a lack of transparency, such a drop could remain hidden for some time.

Today is Monday, October 18, 2021and here is today’s essential intelligence.

Technology and media

NBCU lines up clients, agencies and industry groups to weigh ad measurement

As it seeks new ways to assess the effectiveness of media and advertising, NBCUniversal Media LLC announced that a cross-section of clients, agencies and industry organizations as members of its Measurement Innovation Forum. The group aims to bring stakeholders together to learn about measurement solutions. It will complement efforts by other industry groups, according to Kelly Abcarian, executive vice president for measurement and impact in NBCU’s advertising and partnerships group.

—Read the full article from S&P Global Market Intelligence

ESG in the time of COVID-19

Gas utilities navigate energy transition while facing greater climate scrutiny

Natural gas utilities across the United States are scrambling to find their niche in the clean energy transition amid growing scrutiny as national, state and federal regulators tackle emissions in the industry through the through new rules and stricter project reviews. For example, utilities have announced at least 26 hydrogen pilot projects over the past year as the industry seeks to manufacture and transport the gas, as well as help customers migrate to fuel at low carbon.

—Read the full article from S&P Global Market Intelligence

WPT Obtains Court Approval for Blackstone Takeover; Starwood Capital buys $407 million portfolio

Companies in the real estate sector have increasingly adopted carbon neutral goals in their portfolios in recent years, outlining various measures to reduce energy consumption and use renewable sources, among others. A company can buy carbon offsets and renewable energy credits, in theory neutralizing its own carbon footprint by reducing emissions elsewhere.

—Read the full article from S&P Global Market Intelligence

The future of energy and raw materials

High LNG prices highlight India’s exposure to global gas market volatility

Indian LNG importers are turning away from spot purchases due to high LNG prices and should start considering deeper changes in their fuel supply strategies, as well as their exposure to long-term contracts amid pressure upward trend in global gas prices persists.

—Read the full article from S&P Global Dishes

Iranian LPG exports to hit around 450,000 tonnes in October, rebound in November: sources

Iranian LPG shipments are expected to reach around 440,000 to 450,000 tonnes in October, up from 556,000 tonnes exported in September, mostly to Asia, and expected to rebound in November, trade sources said. Exports through October 13 were around 220,000 tonnes, the sources added.

—Read the full article from S&P Global Dishes

Singapore power utilities may switch to LNG due to Indonesian gas cuts

Singapore’s power utilities may have to switch to LNG due to pipeline gas supply cuts from Indonesia, said the country’s energy regulator, the Singapore Market Authority. energy, in an October 15 press release. The Singapore Stock Exchange, or SGX, has soared in recent days and LNG terminal operator Singapore LNG Corp. said it was looking to boost gas inventories to bolster energy supplies.

—Read the full article from S&P Global Dishes

China’s Shenghong refining complex will receive its first shipment of crude at the end of October

China’s private refinery complex, Shenghong Petrochemical, is expected to receive its first shipment of crude at the end of October, according to trade sources on Oct. 15. million tonnes on October 15, which will allow the refinery to bring in its crude imports on time.

—Read the full article from S&P Global Dishes

Written and compiled by Molly Mintz.

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