Q: With the apparent impending credit tightening (particularly in the U.S.). It seems to me that this presents a great opportunity for alternative lenders to attract new business at better margins. What do you think? What "push back" do you have here other than the fact that these company's own access to capital may be constrained themselves. I have mentioned 2 companies above here, but feel free to comment on others if you have any advice on other opportunities. Thanks
5i Research Answer:
We like the thesis but think it might be a bit of a double-edged sword. Tighter capital markets does mean that alt lenders should get to see more deals/opportunities. However, tighter markets alongside a potential slowdown means these companies might get into a situation where they take on too much exposure just as their borrowers fall on tougher times. Of course, some credit/faith would have to be given to the managment teams that they can manage this type of issue.