Goldman Sachs Tech Leverage Update

Although we receive dozens of research pieces each day, it is always hard to guess which items might be of interest to our readers. As the economy continues to strengthen, the Goldman Sachs Leveraged Finance Weekly Market Update for the Technology, Media, Telecom & Gaming sector seems topical.

Key highlights:

– the all-in “handle” on single B-rated High Yield paper has dropped from about 22% last November to 9.56%, and BB is down to 8.17%

– September was the 2nd weakest month this year for U.S. loan flows, and it was the weakest month for new product issuance in the high yield market since March 2009 (maybe everyone has already issued that wanted to)

– over the past 12 months, LIBOR has dropped from 4.21% to 0.28%, signalling that a relative calm has descended over the international banking system

For folks in the venture debt and mezz debt space, you’ll notice that a $100 million + liquid new issue for a large and profitable TMT play with TNW and lots of shareholders equity is still paying a 9.56% coupon for their debt.

The days of “free money” haven’t returned just yet.

MRM