Steven Sugarman

Filling the Mid-Market Financing Gap

Staci Warden, Michael Arougheti, André Bourbonnais, Bilal Rashid, Brian Reynolds, Steven Sugarman, Stacey Worden, Mike Arrigetti

Panelists from major firms including Aries Management, PSP Investments, and the Bank of California discussed the mid-market's critical role in U.S. job creation following a structural shift where regulatory changes like Basel III forced large banks to exit leveraged lending. This disintermediation has driven institutional investors to deploy over $1 trillion in private debt capital, with regional banks adopting shadow banking models to fill the void left by systemically important institutions. While the sector currently offers strong covenant protection and floating-rate benefits, experts warn that leverage thresholds exceeding 4.5x and stress in energy and mining sectors could precipitate a default cycle by 2018 despite an otherwise resilient outlook.