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Golub Capital's CEO Discusses Q1 2011 Results - Earnings Call Transcript

Stocks in this article: GBDC

Let me shift now and give you some color on the current market environment and what we’re seeing in terms of economic trends. Let me talk first about deal flow. We've seen a very significant increase in deal flow over the last two months March, April and we expect new originations and growth in total investments to be robust in the quarter ended June 30th. Why is that well to be the increase in deal flows the result a couple of things it’s a pickup in middle market M&A activity and it’s also a pickup in opportunistic re-financings and in dividend recaps. To give you a data point on this during the month of April we invested over $32 million in new middle market deals that’s the same pieces are robust December 31, 2010 quarter.

Moving on to a second element deal pricing in the structure. This been a lot written in the media and the press about how in liquid credit markets we’ve seen such strong inflows into high yield bunds in prime refunds that the liquidity it’s what high-yielding broadly-syndicated loan markets toward tighter spreads and higher leverage. I think I recently read that the high yield market average new issue is now between 6.5% and 7% in yield remarkable level. The middle markets been insulated from these trends but it’s not immune, new middle market transactions we’re seeing traditional senior debt pricing now in the 450 to 600 range that’s down about 50 basis points we’re seeing LIBOR flows in the 125 to 150 range and that’s down a little bit maybe 25 basis points. We’re seeing the main pricing in the 12 to 13% range again that’s down about 50 basis points in some cases in some cases up to a point.

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