59 per cent of capital markets executives expect growth in the US direct lending market over the next 18 months, according to recent research by service provider Ocorian. Only 1 per cent expect loan volumes to remain stagnant.
Within the direct lending market, a slight or dramatic increase over the next 18 months was predicted in mergers and acquisitions by 83 per cent of those surveyed, while 77 per cent predicted this for refinancing.
71 per cent expect to see an increase in the leveraged loan market, and 69 per cent suspect that restructurings will see growth.
This uptick in loans is expected to be a result of strong performances from these asset classes and investor desire to diversify portfolios. Almost three quarters (71 per cent) of respondents expect a slight increase in regulation, with a further 15 per cent predicting a dramatic increase.
The research surveyed capital markets executives in the US and UK who specialise in first lien loans to companies with an annual revenue of under USD $1 billion.
Martin Reed, head of capital markets for the Americas at Ocorian, says: “Improvements in regulation are seen as the biggest driver for growth in the direct lending market, with senior executives working in the sector expecting a surge in the volume of loans over the next 18 months. Of course, regulation is not the only factor, and our research identified the need for diversification and the performance of these asset classes during volatile markets are also driving expansion.”
