NAV loans are the latest development in private equity.

Private credit managers see NAV loans as a gold mine.

Private equity managers are testing the waters, and LPs whose capital is at risk are on the lookout for trouble.

I've been thinking about NAV loans and what they might mean for private equity participants.

It led to this what Ted's thinking.

Nav loans, Canary, or the gold mine.

Finitial market participants tend to stretch at the end of a cycle in ways that look

silly in retrospect. In 2000, public companies with millions of clicks and minimal revenue

held market caps in the billions of dollars. In 2008, structured products that sliced and diced subprime mortgages professed to spin junk credit

straw into AAA gold. After their respective fall from grace, dot-coms became dot bombs, and the

only citing of precious metals attached to defaulted mortgages was on the silver screen.

The new new thing in private lending is NAV loans. In its most common form, a private equity sponsor takes on senior debt at the fund level,

using its portfolio or a subset of the portfolio as collateral, or using a credit facility backed by

LP commitments.

The portfolio loan differs from the standard practice of borrowing only at the individual

company level.

Private credit managers see Nav loans as the latest goldmine.

Accussed to providing leverage to individual companies, lenders can now issue 12 to 14% senior paper

at 10 to 20% LTV, backed by a diversified portfolio of companies. The risk of these Navloans

seems minimal, and the rewards are outstanding. Private equity managers look at Navloans as a solution

to problems created by today's difficult environment. For those struggling, Navloans as a solution to problems created by today's difficult

environment. For those struggling, Navloans may help generate distributions to LPs or provide

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