From Reuters.com

Middle market struggles to survive

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With the backdrop of a deteriorating economy and continued tight lending conditions, middle market borrowers felt the full effects of the paralysis. Lending capacity deteriorated even further as some lenders were busy dealing with their own liquidity problems or reevaluating their portfolios, while others were lending selectively.

Amendments dominated activity, as issuers sought covenant relief from their lenders, who, in turn, received higher spreads and hefty amendment fees.

However, some signs of life have emerged in the primary market in the last few weeks.

“We have seen some deals coming slowly into the market, and some of the larger middle market players that were on the sidelines seem to be making their way back into the market,” says one lender.

Adds another middle market lender: “But these are just very small signs and don’t signal a recovery; we can only be cautiously optimistic.”

In fact, when asked how close the loan market is to reaching a bottom, 60% of Thomson Reuters LPC Quarterly Middle Market Survey respondents say we are there now. For the rest caution prevails: one-fifth say the market may not reach a bottom for another six months, while another fifth say it might be another year.