Operating at the Intersection of Technology and the Capital Markets
Tag: debt financing
$67 billion of Speculative Grade Bank Loans and Bonds mature in 2023 per Moody's (see our table below). That figure balloons to $199 billion in 2024. How many of those companies will survive if they are required to rollover debt at 12-15% versus the 4-6% coupon they did their deal at in 2020 or 2021? … Continue reading The Fed Has To Pivot By 2024
Seems obvious, but now would be a good time for those that are flush with cash to step into the breach as commercial banks tighten. Traditional Asset Managers, Private Equity firms, Venture Capital firms and cash-rich Corporates are all in a position to lend to the mid-market as banks pull back. Credit spreads are widening … Continue reading Good Time To Be A Non-Bank Lender
Washington politicians, Treasury officials and Federal Reserve bankers ought to think twice about further leveraging the U.S. Economy. Bailouts and Government subsidies are not the solution to building a robust free market economy (nor to winning elections). What do we have to show for the massive debt issuance that takes place each year? Moral hazard … Continue reading Diminishing Public Debt Returns
Prepare for equity dilution and layoffs as companies roll over cheap maturing debt at higher rates. Companies have been living off of ultra-low interest rates since 2008. Many companies got addicted to 14 years of ultra-low rates and abused the reality by taking on enormous sums of debt, primarily to buy back stock in order … Continue reading Rolling Over Corporate Debt At Higher Rates
An effective recipe for crowding out innovation consists of companies taking on massive amounts of leverage coupled with a Federal Government that has a negative bias toward mergers and acquisitions. We are experiencing this phenomenon now with corporate debt & loans at approximately 56% of GDP (as of Q2, chart below) and a DOJ that … Continue reading High Debt Levels and Negative M&A Bias Are Crowding Out Innovation
Ever "carb-load"? I used to. "Carb-loading" is the process of consuming large quantities of carbohydrates which are stored as glycogen and subsequently burned while competing in an athletic event. Doing so made me feel sluggish. Do you know who else feels sluggish? Software companies that Private Equity owners have loaded with debt. It's difficult to … Continue reading Debt-Loading Is Killing Innovation
It is going to take several years for the U.S. economy to recover back to 2019 levels. 2019 is a low bar in our view as that economy - much like the present one - was debt-fueled, deficit-ridden and plagued by artificially low interest rates. These factors in the aggregate have stymied sustainable, real economic … Continue reading Markets Are Poised To Grind Lower
Private markets are no longer primarily determined by the actions of private buyers and sellers. The State now controls private markets as the primary mover. Guessing the timing, scale and duration of massive fiscal and monetary programs has superseded if not largely replaced fundamental analysis. That's not to say that fundamentals do not matter, but … Continue reading State-Led Capitalism
We are due for an equity market shakeout. The NASDAQ is up 450% since January 2009. The 26% spike in the NASDAQ from October 2019 to February 2020 on a lack of supporting fundamentals is like nothing I've ever seen. By late March we had traded down 30% from February's high yet we have gained … Continue reading The Market Is Upside Down
The SBA lacks the infrastructure to efficiently process the $350 billion capital allotment it received from the recent $2 trillion economic stimulus plan (read our breakdown here). The SBA's loan origination Website is overwhelmed from a bandwidth standpoint. The SBA's Website regularly times out or crashes before providing loan origination IDs to bank partners. It … Continue reading SBA Loan Processing – Every Which Way But Smooth
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