Key Takeaways
- • Lord Abbett's Michael Cibelli, CFA, product specialist for alternatives, frames the private corporate lending market as roughly $1.7 trillion in assets, with senior direct lending as its largest segment.
- • Senior direct lending refers to private loans from non-bank lenders that are first in line for repayment in a bankruptcy, making them less risky than subordinated debt.
- • The U.S. middle market includes over 200,000 businesses, segmented by annual EBITDA into lower ($10-25M), core ($25-100M), and upper ($100-300M) tiers.
- • Banks' reduced ability to lend to smaller companies, due to changes in banking dynamics, has pushed borrowers toward private lenders.
- • Even larger borrowers beyond the upper middle market are increasingly turning to private financing as an alternative to public debt.
Summary
Lord Abbett's educational video on private credit, presented by Michael Cibelli, CFA, product specialist for alternatives, outlines the structure of the private corporate lending market, which the firm places at roughly $1.7 trillion in assets. Within that market, senior direct lending is the largest segment and the category on which many business development companies (BDCs) concentrate. These loans are made by non-bank lenders and are first lien, senior secured obligations, meaning they rank first for repayment if a borrower goes bankrupt. That seniority makes them less risky than subordinated debt. Typical uses include financing company acquisitions, funding growth initiatives, and refinancing existing debt.
The video focuses on the middle market, where borrowers are typically grouped by annual earnings (EBITDA). Companies with less than $100 million in annual earnings have historically sourced capital from banks, but according to Lord Abbett, their ability to obtain bank loans has declined in recent years due to changes in banking dynamics. The firm cites more than 200,000 U.S. middle market businesses as potential candidates for private loans. It divides the middle market into three tiers: the lower middle market ($10 to $25 million in annual EBITDA), the core middle market ($25 to $100 million), and the upper middle market ($100 to $300 million).
Lord Abbett also notes that even larger borrowers beyond the upper middle market have begun to tap private markets, weighing the benefits of private financing against public debt. The presentation is part of the firm's "Lord Abbett Explains: Private Credit" series, with a forthcoming installment planned on yield and performance. The content is educational in nature and does not report specific fund performance figures, deal volumes, or manager-level data.
The video focuses on the middle market, where borrowers are typically grouped by annual earnings (EBITDA). Companies with less than $100 million in annual earnings have historically sourced capital from banks, but according to Lord Abbett, their ability to obtain bank loans has declined in recent years due to changes in banking dynamics. The firm cites more than 200,000 U.S. middle market businesses as potential candidates for private loans. It divides the middle market into three tiers: the lower middle market ($10 to $25 million in annual EBITDA), the core middle market ($25 to $100 million), and the upper middle market ($100 to $300 million).
Lord Abbett also notes that even larger borrowers beyond the upper middle market have begun to tap private markets, weighing the benefits of private financing against public debt. The presentation is part of the firm's "Lord Abbett Explains: Private Credit" series, with a forthcoming installment planned on yield and performance. The content is educational in nature and does not report specific fund performance figures, deal volumes, or manager-level data.
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