IG 200

[IG 200 @CPDDOUGH]

@junkbondinvest This is much uglier than the chart suggests. Direct lender default day marks reflect a waterfall valuation on a future normalized day (likely 18-24m out if all goes well). Syndicated is the distressed bid that would use a 12% + irr (~20 pts).

[IG 200 @CPDDOUGH]

@IlliquidInsight Fantastic chart. And the only way i can square the comments of bdc managers who say they are seeing 8-12% EBITDA growth with PE managers saying in private that 80% of their portfolio is flat to down.

[IG 200 @CPDDOUGH]

@matthewstoller Agreed. Hit rate for private equity ceos is 50 percent at best. And that’s for people that are supposedly experts at finding the successful version of these people.

[IG 200 @CPDDOUGH]

@JulianKlymochko @BDCPublications I asked $4bn PC lender who was moving up market why BSL doesn't keep a lid on the up market deals. "The deals are too risky for them. Would be CCC+. Same reason as has always been the case for 95% of PC." Funny response.

[IG 200 @CPDDOUGH]

@JulianKlymochko LMM spreads are flat as w small evergreen there. Up market are +50-75bps. 500-525 for regular way. back to last summer/fall range. BDCs however are quiet levered plus low velocity in mkt so limited ability to take advantage. Some of the LMM $ are moving though. @BDCPublications

[IG 200 @CPDDOUGH]

@elCHIC0Blanco @kylehtucker FWIW I don’t have a dog in this fight but am very familiar with the roofing contractor universe. He didn’t buy some sleepy business in beacon. He bought a well oiled heavy acquirer. Everything he proposed to change at the business had been thought if.

[IG 200 @CPDDOUGH]

@elCHIC0Blanco @kylehtucker He is paying absurdly high multiples in a very soft market. 15x for bld on peak earnings! But in a very tough market as ibp showed shortly after. Thankfully for qxo, he’s been able to use very expensive stock as currency but seems like that is changing.

[IG 200 @CPDDOUGH]

@oaksey_22 @kylehtucker Real concern is if he tries to overstanderdize from here as suggested. Cut sku’s, automate, transparency etc. Will blow up the business. Seen it elsewhere with PE problems in roofing, others but could be worse here.

[IG 200 @CPDDOUGH]

@oaksey_22 @kylehtucker Yes. Guy doesn’t understand the industry nor that it was already consolidated. So he paid way way up for businesses with questionable value add. And doing so into a very soft market as well. Mkt somewhat gets it after topbuild since they know that one. Stock down 35 percent.

[IG 200 @CPDDOUGH]

@OilandGibbs or Canadian ones: $twmif

[IG 200 @CPDDOUGH]

@LeylaKuni Fwiw fsk funding at ~7.7 with fees is upside down to incremental assets given 1.5 mgmt fee and opex. So 9.5% cost vs ~500 spread loan coming on at 8.5 pre loss assumptions. That said, many others are worse (pflt last week in low 8’s for example ).

[IG 200 @CPDDOUGH]

@LeylaKuni ICMB would have in Feb but gp refi’ed with own capital. Still probably will in next year. Current GECC conducted very dilutive offering to torch equity but saved debt. Couple of the vehicles in bcic would have if hadn’t combined. All that said, I bet we get 5 bks in next 3yrs.

[IG 200 @CPDDOUGH]

@WestsideLAGuy Sell side swaptions desk out of undergrad in ‘06. Russian physics PhD gave two recursive math problems and just stared at me for two hours while I scratched away.

[IG 200 @CPDDOUGH]

@UnicusResearch What’s weird about this is that it assumes any of this shit trades. It doesn’t! Couple portfolio ones and diameter buying discounted bsl loans at a discount. That’s it. Maybe more when people are truly fkd in 6 months.

[IG 200 @CPDDOUGH]

@IlliquidInsight My view is that we’re in the rebound. Rebound to the pre-bs 2016-2022 era. Will cause the PE market to shrink dramatically and probably takes another 5yrs. Rebound to no roll-ups (as was learned pre-gfc) and 12x as a full price not 20x.

[IG 200 @CPDDOUGH]

@atelicinvest sent you dm

[IG 200 @CPDDOUGH]

@blondesnmoney They should all sell to Apollo. Would be much easier.

[IG 200 @CPDDOUGH]

@homeprosnews I don’t buy this. Apollo 20x for a minority stake? Not known for either minority stakes or for high multiple entry points. If this is happening it’s a highly structured transaction with some sort of pref/warrants that gets you there.