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Manulife Investment Management - Fri, 07/28/2023 - 16:07

Mezzanine financing can shine when macro clouds loom

Yields have spiked, yet they may soon fall if the economy stalls. Investors extending junior credit, or mezzanine financing, to middle market companies now have an opportunity to lock in fixed-rate contractual coupons while they’re still high and while terms remain favorable for lenders.

Key takeaways

  • The speed and magnitude of interest-rate hikes have made this market challenging for businesses seeking to refinance or raise incremental senior debt.
  • Junior credit’s flexibility has become more desirable to companies that need fresh capital, and investors supplying mezzanine financing can now benefit from higher contractual yields.
  • Junior credit characteristics in this year’s vintage—higher coupons and better terms for lenders—make this moment, in our view, one of the most attractive entry points for mezz investors in years.


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Manulife Investment Management

Manulife Investment Management is the global wealth and asset management segment of Manulife Financial Corporation. We draw on more than a century of financial stewardship and the full resources of our parent company to serve individuals, institutions, and retirement plan members worldwide. Headquartered in Toronto and Boston, our leading capabilities in public and private markets are strengthened by an investment footprint that spans 19 countries and territories. Our private markets strategies include private equity and credit, real estate, infrastructure, timber, and agriculture. Responsible stewardship is integral to our business and culture, and we seek to be a global leader in creating long-term, sustainable, value for our stakeholders.

Amy Theuninck
Managing Director, Insurance Solutions
atheuninck@manulife.com
857-328-6425

www.manulifeim.com
197 Clarendon St, Boston, MA 02116
United States

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