Why Private Debt?
Opportunities abound for a BDC when demand for capital is high and supply is limited. That's exactly the lending market dynamic for private American companies seeking to finance their growth and operations. Why? Because bank lending has fallen by approximantely 50 percent over the last 20 years.1 Increased and more complex regulations imposed on banks have restricted their ability to lend and caused privately owned companies to seek out alternative lending sources like Corporate Capital Trust II to fill this gap.
Investing in privately held companies presents certain challenges, including lack of publicly available information. Additionally, market opportunities can change and there is no assurance that middle market trends will continue.
There is no assurance that this lending gap or demand for middle-market financing will remain at these levels or will not decrease in the future.
1 “Par Amount Outstanding of Leveraged Loans,” S&P LSTA Index as of March 31, 2017.