S&P and Lincoln Launch Private Loan Indices
S&P Dow Jones Indices, in collaboration with Lincoln International, has launched the S&P Lincoln Senior Debt Index series. The new indices are designed to serve as new benchmarks for the private credit and direct lending markets, providing more transparency into the asset class.
- The private credit market has seen immense growth, expanding to over an estimated $1.7 trillion, a scale now comparable to the leveraged loan and high-yield bond markets. Projections estimate the market could reach $5 trillion by 2029, driven by demand from investors for higher yields and from companies for flexible financing. - Historically, private credit has offered attractive returns, with some analyses showing annualized returns of around 10% over the last 15 years, outperforming high-yield bonds. This performance is a key driver for the increased allocation to the asset class by institutional investors like pension funds and insurance companies. - The new index series is a collaboration between S&P Dow Jones Indices' CEO, Catherine Clay, and Lincoln International's CEO, Rob Brown, and will initially cover the U.S. and European markets. The indices will be published quarterly at first, with plans to move to monthly reporting before the end of 2026. - A key differentiator for these indices is their foundation in Lincoln International's extensive private market database, which includes data from over 25,000 portfolio company valuations performed annually. This allows the indices to be based on the fair value of individual loans rather than relying solely on fund-level data. - The underlying assets of the indices are illiquid senior debt facilities, including first lien, unitranche, and second lien loans, primarily issued to private equity-owned companies. The companies in Lincoln's valuation database, which informs the indices, have a median EBITDA of approximately $50-60 million. - According to Rob Brown, CEO of Lincoln International, the collaboration aims to set new standards for how investors measure and understand the private credit market. Catherine Clay, CEO of S&P Dow Jones Indices, has emphasized that as private markets mature, the need for trusted data and benchmarks becomes more pronounced.
