UK mezzanine and leveraged loan investor Intermediate Capital Group states that the primary leveraged buyout market remains shut, but that there “continue to be very attractive investment opportunities in the secondary market for senior leveraged loans.”
Releasing its interim management statement for the three months to 31 December 2008, ICG states that at its recent quarterly portfolio review, over two thirds of its portfolio companies were performing at, or above, the prior year level and close to half were on, or above, budget.
“However, since the end of September we have seen a marked deterioration in the operating performance of a limited number of weaker assets as economic conditions have worsened. Our watchlist consists of 13 percent of our portfolio by value reflecting the impact of deteriorating economic conditions and the heightened level of vigilance necessary in the current climate.”
On the outlook, ICG adds: “We expect net new investments to be limited to the secondary market for senior loans where we are finding excellent value. Core income in the second half is expected to be slightly lower than the level achieved in the first half (adjusted for one off contributions announced at the Interims), as we do not accrue rolled-up interest on impaired assets. We currently anticipate that provisions will be noticeably higher than in the first half due to the impact of the worsening economic environment on our weaker assets and the strength of the Euro against Sterling. Capital gains are expected to remain at the low level experienced in the first half.”
Shares in ICG have fallen by at least 13.32% to 498 pence in morning trading on 27 January.
Source: Thomson Merger News