PALMER SQUARE CAPITAL BDC INC. 
(MT Newswires) -- Chris Long, CEO of Palmer Square Capital, has highlighted the success of his company's initial public offering (IPO) despite a closed market and credit concerns. He attributes Palmer Square's success to a strategy based on an opportunistic credit approach and active risk management.
Palmer Square differs from traditional BDCs by focusing on large loans with average interest cover ratios of 2.3 times, and by targeting recession-resistant, recurring revenue businesses. Traditional BDCs, or Business Development Companies, are investment vehicles that provide finance to small and medium-sized businesses. Typically, they invest in growth-stage or transition businesses, offering both loans and equity, and are designed to facilitate access to capital for those businesses that may not be able to obtain finance through conventional means.
Long emphasises the importance of navigating between markets, with a presence in both the largely syndicated $1,500bn market and the direct private credit sector. The syndicated market refers to a market where loans are provided by a group of lenders and are structured, arranged and administered by one or more commercial banks or investment banks, known as arrangers. These loans are often large and spread across several lenders to reduce individual risk, and are typically used to finance large transactions such as mergers and acquisitions, leveraged buyouts or corporate refinancings.
He expresses concern about risks in the small middle market for credit, where interest cover ratios are low (between one and one-and-a-half times), which could lead to stress in the event of an economic downturn. However, Long sees these risks as opportunities for Palmer Square.
As far as private credit is concerned, despite concerns about systemic risks due to a large influx of capital, Long sees current growth as healthy, supported by uninvested capital from private equity funds and an increase in refinancing and strategic activities. He remains attentive to market developments and is ready to seize opportunities as they arise, including private credit mega-deals.
