Why Mid-Market Loan Yields Are Not Coming Down

Publication: PEHub
Published Date: 6/18/2012

We’ve all seen the data showing that the first quarter middle market leverage loan volume was much less than everyone expected. 
 

According to S&P LCD, volume in the first quarter was a mere $2.0 billion, or 59% below the first quarter of 2011 and relatively flat with the anemic level of the fourth quarter of 2011.  And when the data is tabulated for the second quarter, most industry pundits expect a similar trend with loan volume for the quarter to date at $2.1 billion vs. $4.7 billion in the second quarter of 2012.  And anecdotally, the lenders we talk to continually indicate that their deal pipeline is light. 

So wouldn’t this suggest that yields on middle-market loans should be declining?

Unfortunately, like so many other economic events, once you dig a little deeper the logical answer turns out to be wrong.

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