Middle market growth continues to be strong. The RSM US Middle Market Business Index (MMBI) posted a score of 134.5 for the second quarter of 2018, just a 2.2-point decrease from the first quarter’s record-high of 136.7 which was buoyed by new tax legislation. An MMBI score greater than 100 signifies growth within the middle market.
Based on strong earnings and revenues, executives were expected to expand hiring and increase employee compensation. Market sentiment among middle market businesses barely swayed despite increased tension over international trade and the slight tightening of finance conditions around the in the second quarter of 2018, potentially signifying the middle market's continued insulation from broader market trends. [source]
Middle Market Loan Trends
Over the last few years middle market loan spreads have been steadily decreasing while the respective benchmarks have increased, resulting in a tightened yield for an increased risk. This spread compression, a result of competitive bids and a tightening market, continued through the fourth quarter of 2017. Since then, we have seen a slow but steady increase in coupon spreads in 2018 which signals a rebound on the profitability of middle market loans. Download the PDF to learn more.
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