Share this report:
Share this report:
Q1 2021
Data analysis
Debtwire direct lending data
Research by
Ben Watson
Senior market analyst Debtwire Par
Rising tide of large deals boosts activity to highest quarterly issuance since Q3 2019
Mid-market volume vs number of deals
Mid-market issuance climbs quarter-on-quarter
Over the last few months, mid-market issuance has been able to reclaim its pre-pandemic levels with €4.2 billion raised. Of this, almost 60% came via direct lending facilities worth €2.43 billion. Despite the overall increase in activity in Q1, non-direct lending mid-market issuance sank to its lowest level since Q3 2018, with direct lending picking up the slack and showcasing the sector’s enduring strength.
Share this article:
Use of proceeds
Unitranche activity pivots to new money issuance
In yet another record for Q1 2021, the level of new money unitranche activity exceeded all previous quarters. M&A accounted for more than 90% of unitranche issuance in Q1, with €3.9 billion raised. The total unitranche amount, however, was weighed down by a lack of recaps and refinancing transactions, which accounted for just 7% of deals, worth €300 million.
Number of unitranches vs unitranche volume
Second highest quarterly value on record
Direct lending issuance in Q1 of this year reached the second highest quarterly value on record, with €6.33 billion issued from 150 deals. That figure represents the largest quarterly issuance since Q3 2019 (€6.6 billion), and is riding the crest of a surging wave of issuance following the onset of the pandemic, which had dropped to lows of €2.77 billion in Q3 2020. Digging deeper, the number of unitranches issued in Q1 2021 (65) represents a historical low of just 43% of the total number of direct lending deals. Despite the low volume, the aggregate value of unitranches issued reached €4.3 billion, representing two-thirds of direct lending in Q1.
Large cap vs mid-market unitrache
Unitranche issuance climbs despite low deal count
The lower count of unitranche facilities permeated the market, with both the large cap (more than €150 million in debt) and mid-market spaces comprising fewer unitranches compared to the previous quarter. Nevertheless, issuance in both categories rose — highlighting the increasing average deal size over time. Large cap deals were boosted significantly by UK holiday company Bourne Leisure’s £1.8 billion unitranche, which backed Blackstone’s acquisition of the firm in February.
Sub-regional unitranche distribution
UK cruising in pole position
Regional issuance by deal count has remained largely unchanged, with only small year-on-year movements overall. The UK remains in the top spot with consistent direct lending debt flow. France bolstered its second-place position, making significant gains on DACH. Volumes were more volatile on an annual basis, with UK firms having issued more than half of the total amount (€3.2 billion), France in second with €1.44 billion, and DACH in third with €600 million.
Sectoral issuance
TMT back on track
Direct lending issuance saw an explosion in activity from the gaming and leisure sector; however that sum is entirely due to one deal, namely the Bourne Leisure deal. When excluding this anomaly from the data, TMT regained its prominence, with firms in the sector having issued more than a quarter of the total direct lending activity in Q1 2021. Prior to 2020, TMT had consistently racked up the largest proportion of financing. However, last year TMT’s crown was taken by financial services firms, followed closely by healthcare companies.
European Direct Lending Perspectives
Q1 2021
All rights reserved. Check our
Privacy Policy
and our
Terms of Use