The lesser of two evils
07.10.2024 – Articles
The hunt for liquidity continues as exits remain lacklustre. Using NAV facilities for distributions is fast becoming a no-no, which leaves continuation vehicles as the better option, or at least not the worst.
Exit activity remains subdued. According to S&P Global, successful sales in the first half of 2024 came in at 60% below the peak in 2021.
Against this backdrop, S&P predicts fund managers will increase their use of debt to preserve investors’ capital or provide returns on aging investments.
“Yet we don’t expect that all our ratings on alternative investment funds (AIFs) will be impaired by rising leverage. Even though a higher debt burden at the fund level will weaken our view of financial risk, most rated AIFs have the headroom to absorb this debt increase at existing rating levels.