Core mid-market returns at “all-time high”
Returns from the core middle market are at an “all-time high”, according to Timothy Lower, chief executive and chief investment officer of Willow Tree Credit Partners.
The former Ares Management partner said that while the upper middle market has become very competitive, conditions in the core middle market have actually improved as larger players move into larger deals.
“The upper middle market has got very competitive, with the top 10 managers raising mega funds for unitranche loans,” he told Alternative Credit Investor.
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“There are structural and documentary provisions that are not lender friendly that are making their way into those deals as a result.
“So I think our landscape has actually improved as larger players move into the upper middle market.”
Willow Tree Credit Partners was founded by Lower in 2017 and focuses on lending to borrowers with EBITDA ranging between $5m (£3.8m) and $75m. It has $4bn of assets under management.
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Lower said that he sees “great prospects” in the core middle market.
“There is spread compression but liabilities are also getting tighter so the return picture hasn’t changed,” he said.
“The market is at an all-time high for me, returning 12 per cent for a well-performing senior loan.
“Previously that return opportunity had been reserved for companies that were not doing well.”
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