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Actionable Investment Opportunities

We highlight actionable investment opportunities across various asset classes, including short-term US and Canadian government debt, high-yield bonds, private credit strategies, preferred and structured equity, venture debt, and new allocations to private equity. Short-term US and Canadian government bonds offer yields of 4.5%-5.0%+. Private credit and asset-backed credit solutions provide opportunities with returns in the low double-digits to mid-to-high teens, while private equity secondaries present attractive deals with wider discounts.

Short-term US and Canadian government debt

4.5%-5.0%+ yields to maturity for US and Canadian Treasury bonds (for short maturities of up to two years) 

Private Credit (offering potential returns from low double-digits to mid-to-high teens)

Demand for flexible capital solutions (junior credit) is increasing sharply as sponsors are increasingly dependent on M&A acquisitions to drive portfolio company growth and cannot add senior debt (either syndicated or through private direct lenders) to their capitalization stacks.  This junior capital can provide 1-2x turns of additional leverage offering mid-teens IRRs through offering flexible payment structures (mix of cash and PIK interest).  Additionally, these capital solutions can demand stronger protections in terms of financial and maintenance covenants.  

Asset-backed credit solutions are seeing increased demand as companies seeking liquidity are pledging high-quality sources of collateral such as receivables, inventory, and certain fixed assets.   

Opportunistic credit funds should benefit from a wider range of higher-returning potential investments including a) dislocated publicly-traded bonds and loans and b) opportunities to provide bespoke bi-laterally negotiated credit solutions such as rescue financing or balance sheet restructuring to corporations.  

Venture debt (loans to Venture-backed companies) is increasingly interesting, especially post the SVB collapse.  The borrower universe has expanded (larger, more-established borrowers), expected yields have increased, and terms have become tighter and stricter.   The loans also have an attractive amortization component which leads to an attractive de-risking element.

Private Equity Secondaries

Activity in the secondary market has picked up significantly during H1 driven by institutions selling existing LP positions either to a) bring allocations to PE more inline with their targeted ranges or b) facing liquidity issues as distributions are delayed given current market conditions while capital calls are continuing.

Deal volume increased substantially vs H1 2022 and discounts have widened significantly for LP transactions with average deals done in the low-to-mid 80% range of stated NAV vs. low-to-mid-90%s last year.  

For the first time in several years, modest discounts are even available for best-in-class GP-led continuation vehicle (single asset) deals. 

Continue Reading Topics from This Quarter's Review

Inflation and Labor Markets

Inflation has peaked in major regions, but the pace of core inflation’s decline remains uncertain. Labor markets in the US and Canada are healthy but showing signs of loosening, with

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Macroeconomic Conditions

The US economy is holding up well with strong consumer spending but weak manufacturing data. A mild recession is predicted for 2024, while Canada’s growth may slow due to rising

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Shorter-term View

Multiple potential paths for equity returns are projected over the next 6-12 months, with an optimistic case envisioning a rise in S&P 500 index to 4,800-5,100 due to moderating inflation

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Equity Markets

Equity markets rallied strongly with US stocks outperforming international markets. The broadening of the rally was driven by positive economic data and declining inflation, but uncertainty remains regarding H2 2023

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Fixed Income Markets

Safe fixed income declined modestly in Q2 as interest rates increased. High yield bonds and leveraged loans appreciated YTD, but credit stress signs are emerging with increasing default rates.

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BCA is not for everyone – and we are proud of that distinction. We look for a select group of individuals (and their entities) whose financial position and preferences enable them to thrive while working with us.

We welcome your interest. Please give us at call at +1-406-556-8202 or fill in the form below to set up a confidential exploratory consultation.