Deal flow for mezzanine debt continues to move along at a steady pace. Pipelines are so full, in fact, that providers are struggling to keep up and are not closing deals as quickly as they’re stacking up.
According to the KeyBanc Mezzanine Debt Quarterly Newsletter, capital levels remain high. Over 65% of issuers surveyed in the newsletter have more than $50 million in available capital and nearly two-thirds have more than $100 million. The amount of capital that is currently available is a strong signal for ongoing growth in deal flow.
Along with the available capital, leverage multiples are increasing across the industry. Additionally, more providers are willing to take on a second lien, showing a loosening in lending standards.
Overall, it appears that mezzanine debt is on track to continue increasing deal activity for the foreseeable future. Despite the fact that funds have struggled to keep up with the deal flow, the amount of capital available and easing lending practices indicate further growth.