KBRA Releases Research – Private Credit: 12% Is Here–First Look at Interest Coverage and Liquidity for Middle Market Borrowers by Sector
KBRA releases an update to its research regarding the 2024 outlook for private credit middle market borrowers, with a special focus on two variables that are worthy of focused attention: interest coverage and liquidity.
- KBRA releases an update to its research regarding the 2024 outlook for private credit middle market borrowers, with a special focus on two variables that are worthy of focused attention: interest coverage and liquidity.
- At that time, KBRA’s assumptions of fed funds rates at 5.5% and total average interest costs at 12% seemed conservative.
- Latest financials show that most borrowers and sponsors were tightening belts, bolstering both interest coverage and liquidity heading into 2023’s interest hikes.
- Interestingly, the stress test reveals significant differences in interest coverage and liquidity across the three largest sectors, with business and professional services companies tending to have the strongest interest coverage metrics.