In the US middle market loan yields have fallen in the second quarter of 2019 due to strong demand from alternative lenders and private debt funds – putting pressure on pricing. In addition, the benchmark Libor rates (for floating-rate loans) also contributes to the falling yields, writes Reuters in this news item.
Average yields fell to 7.57% in the second quarter, down from 8.06% (quarter over quarter). And the average middle market spreads have tightened to 463bp from 483bp in the first quarter. That may lead to that investors will move their money to the loan market for smaller companies, a less liquid segment of the market but with even higher premiums of 200-300 basis points.