CANADA BONDWRAP: Direct Lending Returns Peaked, Third Eye Says

Returns on direct lending — private loans to companies usually made by funds, often in the context of a leveraged buyout — have probably peaked, with stress building up in the private credit market in Canada and the US, according to Arif Bhalwani, chief executive officer of Third Eye Capital, a firm that specializes in providing credit to businesses undergoing change or special situations.

• Default rates have been artificially suppressed by liability management, amendments, waivers and other forms of out-of-court restructuring that are keeping more companies out of the formal bankruptcy process, Bhalwani told Bloomberg in an interview ...