The firms created a matrix of indices of issuers’ financial health and loan quality and yield that include geographic areas, sectors and size classes
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Kroll, an US firm for risk management, and Nasdaq-listed financial services player Stepstone launched Kroll StepStone Private Credit Benchmarks, which are proprietary indicators built using loan- level data and information from more than 15,000 deals (80% direct lending and 20% bonds issuances), as opposed to fund-level aggregates or modelled estimates. The Benchmarks deliver more timely, reliable and actionable insights, on an anonymized basis, which are essential to the accelerated growth of private investment markets (press release).
Palak Patel, Kroll’s Private Capital Markets, Private Credit & Equity Data, Analytics, and Workflow Solutions head, said: “With this project, we intend to bring greater efficiency and transparency to the private credit market for which were previously available only extremely fragmented information that are also difficult to get. Advisors and potential issuers had to contact companies and investors individually to depict prevailing market conditions for their sector and size. Such process is sometimes very long and expensive. The project is responding to increasing requests from our client companies to have indicators that are more agile and easier to use. We are also collecting data worldwide in addition to the three benchmark areas, especially in Asia, but we will activate the relevant benchmarks as soon as there is sufficient demand from customers in that area”.
Marcel Schindler, partner and CEO of StepStone Private Debt, added: “We continue to see strong demand for private credit among investors around the world, hence a growing need for clarity and granular benchmarks in this rapidly evolving asset class. Kroll’s robust dataset on private credit and the information available on StepStone proprietary platform SPI create a powerful intelligence toolkit that enables better decision-making for investors and market participants in this segment.”
This also reflects the rapidly growing importance of private credit in financing the economy. In 2000, the global volume of non-bank credit outstanding amounted to 40 billion US Dollars. By mid-2024, it grew to 1600. A 40-fold growth, while GDP grew by no more than 93% over the same period.
Kroll and Stepstone therefore decided to join forces and built a database covering around 40% of all private credit transactions, based on information fetched after having signed several non-disclosure agreements.
BeBeez could preview the database that the companies will illustrate in detail with a worldwide webinar on 16 September, Tuesday. The Benchmarks takes the form of a weekly updated three-dimensional matrix in which the user can select samples of transactions relating to a production sector, a geographic area (currently USA which accounts for 80% of transactions, the UK and Continental Europe), and a company size class, which can be small, medium/small, medium, medium/large and large depending on the Ebitda level.
The user can then search for each sample, i.e. benchmark, two classes of average indicators: one relating to transactions (issue price, coupon level, spread with respect to market rates and maturity), and another concerning the financial health of issuing companies, (Ebitda margin, Ebitda to interest expense ratio, net financial position/Ebitda). The user can then instantly visualise the trend, for the selected period, of the fundraising standards in its business.
