July saw the US debt markets continuing to rebound in stark contrast to most western economies and Australia.


‘Spread’ is the observed range of pricing offered by various lenders in response to a given debt offer,  with smaller spreads indicating increasing liquidity.  Our NY office, SPP Capital, reports the second month tightening spread since the beginning of the COVID-19 crisis.


As the tables below observe the primary beneficiaries of the improved pricing dynamics are issuers with at least $10 million of last 12 months (“LTM”) EBITDA, but there is evidence of more competitive spreads for issuers with as little as $5 million of LTM EBITDA.  Leverage multiples, however, remain quite conservative, but with some signs of loosening for larger issuers.


Total Debt/EBITDA (Amounts in USD)
 < $5.0MM EBITDA > $10M EBITDA > $20M EBITDA
July 20202.50x – 3.25x3.50x – 4.50x4.00x – 5.25x
June 20202.50x – 3.25x3.50x – 4.50x4.00x – 5.00x
July 20193.00x – 4.00x4.00x – 5.50x4.50x – 6.00x
Commentary:Leverage multiples remain conservative, but are beginning to expand, especially for larger issuers.


Senior Cash Flow Pricing
 Bank Non-Bank < $7.5M EBITDA Non-Bank > $15M EBITDA
July 2020L+ 3.25% – 4.25%L+ 6.50% – 8.00%L+ 5.50% – 7.50%
June 2020L+ 3.75% – 4.50%L+ 7.00% – 8.50%L+ 6.50% – 8.00%
July 2019L+ 2.50% – 4.50%L+ 6.00% – 8.00%L+ 5.00% – 6.50%
Commentary:Spreads continue to compress as competition for assets intensifies.


In Australia,  the major banks seem to be still smarting in the aftermath of the Royal Commission and keener on supporting their existing debt portfolio than writing new business.   Demand for debt has not gone away with COVID disruption and is creating cashflow issues for some;  whilst also creating acquisition opportunities for others.   We see an increasing number of companies looking beyond the Banks for finance, with specialist debt funds and Family Offices stepping forward to fill the gap.


With a dislocation on the domestic debt markets,  we are increasingly being approached by companies seeking to run a competitive process to secure debt from international or domestic non-bank lenders.  We find non-bank lenders continue to engage well when presented with well-prepared ‘offer’ with cycle times from engagement to term sheet stage remaining within 6 weeks.

Learn more about Eaton Square’s Funding Options Review. Download the brochure here.


If you have current or prospective liquidity, you may book a complimentary call with any of our Principals.

*Securities offered through SPP Capital Partners, LLC: 550 5th Ave., 12th Floor, New York, NY 10036. Member FINRA/SIPC.

Maurice Spicer

Maurice Spicer
Maurice is a Principal of Eaton Square. He was a Tax and Commercial lawyer and partner of Kliger Partners (now KCL Law) for over 10 years. He has advised, facilitated and been a Principal in transactions across the spectrum including M&A, Capital raisings and Debt funding.
E: [email protected] | P: +61 408 662 675
Neil Bourne

Managing Principal

Neil Bourne is the Managing Principal for Eaton Square Sydney. Neil has been working with growth stage technology business for over 15 years in venture capital and corporate finance. Neil is married to Sarah, has three children and enjoys Brazilian jujitsu and outdoor sports.

[email protected] 61 1800 332 866 eatonsq.com