Daily update: October 18, 2021

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Start each business day with our analyzes of the most pressing developments affecting the markets today, as well as a curated selection of our most recent and important information 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 have increased tenfold in the last 10 years, along with a quadrupling of 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 in capital available for new investment. Private debt is typically priced at a premium over syndicated debt, a nod to the lack of guidelines on leverage, rating and liquidity. As the private debt market has grown, it has become more sophisticated, including the 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, nonbank financial institutions stepped in to provide credit. The higher yields have attracted some institutional investors. This increase in interest has led to more borrowers and private sponsors entering the market. Because of illiquidity in the private debt market, investors 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 of 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 issuers of private market debt held by middle market guaranteed loan bonds (CLOs). About 75% of these credit estimates, attributed between 2017-2019, for Private debt market CLO had a score of ‘b-‘. In the heavily unionized CLO market, only around 20% achieved a similar score.

While private debt carries increased 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 observers 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 it’s Monday, October 18, 2021, and here is today’s essential intelligence.

Technology and media


NBCU aligns clients, agencies and industry groups to assess ad metric

In search of new ways to assess the effectiveness of media and advertising, NBCUniversal Media LLC announced that a representative sample of clients, agencies and industry organizations are members of its forum of measurement innovation. The group’s objective is to bring together stakeholders to learn about measurement solutions. This will complement efforts by other industry groups, according to Kelly Abcarian, executive vice president for measurement and impact at NBCU’s advertising and partnerships group.

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

ESG in the time of COVID-19


Gas utilities navigate the energy transition while facing greater climate monitoring

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

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

WPT Obtains Court Permission For Blackstone Buyout; Starwood Capital buys $ 407 million portfolio

In recent years, companies in the real estate sector have increasingly adopted carbon neutrality targets across their portfolios, 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 its emissions elsewhere.

—Read the full article by 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 moving away from spot purchases due to high LNG prices and are likely to start considering deeper changes in their fuel sourcing strategies, as well as their exposure to long-term contracts as the upward pressure on world gas prices persists.

—Read the full article by S&P Global Platts

Iranian LPG exports to reach around 450,000 Mt in October, rebound in November: sources

Iran’s LPG shipments are expected to reach around 440,000-450,000 t in October, compared to 556,000 t exported in September, mainly to Asia, and are expected to rebound in November, trade sources said. Exports through Oct. 13 stood at around 220,000 tonnes, the sources added.

—Read the full article by S&P Global Platts

Singapore’s electric utilities could switch to LNG due to Indonesian gas cuts

Singapore’s electric utilities may have to switch to using LNG due to the reduction in piped gas supply from Indonesia, the energy regulator of Singapore said on October 15. country, the Energy Market Authority. The reduction in pipeline gas supplies comes after the prices of electricity futures on the Singapore Stock Exchange, or SGX, have risen in recent days and the operator of the LNG terminal, Singapore LNG Corp., has said he was looking to increase gas stocks to bolster energy supply.

—Read the full article by S&P Global Platts

China’s Shenghong Refining Complex to Receive First Shipment of Crude in Late October

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

—Read the full article by S&P Global Platts

Written and compiled by Molly Mintz.


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