THL Partners Scott Sperling on leveraged loans

Scott Sperling isn’t worried about $430 billion of leveraged loans. At least, that’s not how the co-president of private equity firm, THL Partners, appears in this excerpt from an exclusive video interview with The Deal.

Yeah i think we’re all we’re all concerned and reasonably cautious about it but we’re also highly focused on it and i think one of the interesting things that we’ve seen in the last four months is the amazing depth and size of the credit markets and i think if you look back in march i don’t think you ever would have believed that we for example could have financed all

Of warner music senior debt out and this is senior debt that was doing 2011 with a bond deal that was more than twice as large as we set out to raise and it was raised in one day those are the sorts of things that i think give you some belief a reasonable belief that there is an enormous amount of capital available that the constraint isn’t the amount of capital to

Help refinance these transactions but it will be the terms under which that capital is accessible and the quality of the companies that are trying to access those various markets to refinance this debt if you look at where the capital markets really expanded for in the leveraged buyout space it wasn’t so much the high-yield side the percentage of high-yield and the

Multiple of ebay da that was supplied by by high yield was reasonably constant over the course of the last 20 years even through you know there were some ups and downs but it was you peak to peak was reasonably constant for the high-yield side of the debt markets what you saw was an enormous expansion of the bank financing and the ability to access non traditional

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Bank lenders cielos and other sorts of institutional money that was available for senior debt and i think what you’re going to see is the ability to use the bond market the high-yield bond market in conjunction with the equity markets and with ma to deal with most of the maturities that you’re going to see in the the particularly the 2011 to 2014 range you’ll also

See the ability to continue to extend out the maturities of the existing that past that big bubble that people point to in 2014 and you started to see that already with many of the larger transactions where you’ve either refinanced using high-yield that puts you out into the 2016-2017 range or you’ve extended out your bank maturities past that so-called debt wall

That starts to pop up in 2014 so i think that there’s reason to believe that we can deal with the magnitude of debt that we have to deal with over that period of time and the data would suggest that the capacity exists within the markets to deal with it we’ll just have to you know again continue to be highly focused on that and make sure that we’re very diligent

In managing those capital structures

Transcribed from video
THL Partners Scott Sperling on leveraged loans By TheDealVideo