THOMSON REUTERS LPC S FIFTH ANNUAL MIDDLE MARKET LOANS CONFERENCE

REUTERS / Jean-Paul Pelissier REUTERS / Firstname Lastname THOMSON REUTERS LPC S FIFTH ANNUAL MIDDLE MARKET LOANS CONFERENCE Ioana Barza Director of Analysis 646-223-6822 ioana.barza@tr.com

REUTERS / Samrang Pring Agenda Global View Topline figures mask real new money declines How much M&A is financed in the loan market? How much M&A could we expect? U.S. Leveraged Lending Riding the refi wave How do terms & conditions stack up? The usual suspects! Supply/demand dynamics U.S. Middle Market Lending Record fundraising vs. low supply Will loan issuance get a revival this year? How are terms & conditions changing?

1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 Issuance ($B.) Global lending fell 12% in 1Q17 to $906B but was up 17% yoy 1,40 1,20 Global loan issuance Americas EMEA APAC (ex. Japan) Japan 1,00 80 60 40 20 3

1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 Issuance ($B.) Issuance ($B.) At US$578B in 1Q17, global loan refinancings were flat vs. the prior quarter and up 58% yoy while new money, at $328B, was down 27% vs. 4Q16 and down 2 yoy Global loan refinancings Global new money lending 90 Americas EMEA APAC (ex. Japan) Japan 80 Americas EMEA APAC (ex. Japan) Japan 80 70 70 60 50 40 60 50 40 30 30 20 20 10 10 4

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Issuance ($B.) At $166B in 1Q17, global M&A-related lending was down 4 vs. 4Q16 and flat yoy Valuations need to come down or sponsors need to develop greater confidence on prospects for growth. One of those things has to happen to close the gap. I don t think financial markets have held M&A back in any way. Markets have been as good as they have ever been but valuations are high and optimism is low from the PE guys. They are running models based on outlook and not getting to the right place to justify paying up, said one arranger. 45 40 35 Global M&A lending Americas EMEA APAC (ex Japan) Japan 30 25 20 15 10 5 5

1Q07 4Q07 3Q08 2Q09 1Q10 4Q10 3Q11 2Q12 1Q13 4Q13 3Q14 2Q15 1Q16 4Q16 1Q07 4Q07 3Q08 2Q09 1Q10 4Q10 3Q11 2Q12 1Q13 4Q13 3Q14 2Q15 1Q16 4Q16 Value ($B.) Number of deals Global M&A deal activity fell 37% to $778B in 1Q17 vs. 4Q16 but was up 12% yoy Slides 6-8: Figures track entire size of all M&A transactions (not financing portion). Global M&A by dollar value Global M&A by deal count 1,60 Americas Europe Asia Pacific Japan Africa/Mid. East 5,000 Americas Asia Pacific Europe Japan 1,40 4,500 1,20 4,000 1,00 3,500 3,000 80 2,500 60 2,000 40 1,500 1,000 20 500 0 6

1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 Value ($B.) Number of deals Number of deals (<$500M) YOY Comparison: the number of smaller M&A transactions is down globally 60 Global M&A deal values by deal size $500M-$1B $1B-$5B $5B-$10B $10B+ < $500M Global M&A deal counts by deal size $500M-$1B $1B-$5B $5B-$10B $10B+ < $500M 160 5,000 50 40 140 120 100 4,500 4,000 3,500 3,000 30 80 2,500 20 10 60 40 20 2,000 1,500 1,000 500 0 *Figures track entire size of all M&A transactions (not financing portion). 7

1Q07 4Q07 3Q08 2Q09 1Q10 4Q10 3Q11 2Q12 1Q13 4Q13 3Q14 2Q15 1Q16 4Q16 Value ($B.) U.S. M&A deal making dropped by 6 to $272B in 1Q17 and down 5% yoy 700 600 500 U.S. deal making activity by dollar value It s funny, issuers are very optimistic from a business standpoint, they feel good about the administration being good for their business, whether it s manufacturing or regulation driven. 400 300 But they are also waiting for the other shoe to drop with tax reform, interest deductibility of debt, and repatriation. 200 It s optimistic limbo which is a weird place. 100 0 The world feels good but no one knows what is going to happen from a business standpoint, said one arranger. 8 *Figures track entire size of all M&A transactions (not financing portion).

1Q96 3Q96 1Q97 3Q97 1Q98 3Q98 1Q99 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 Issuance ($B.) U.S. M&A lending was down 49% in 1Q17 to $69B vs. 4Q16, down 32% yoy How can your board make a decision today on a transformative acquisition without knowing the consequences with regard to tax reform? asked one arranger. 225.0 20 U.S. M&A-related loan issuance Non-Lev. Lev (excl. LBOs) LBOs 175.0 15 125.0 10 75.0 5 25.0 9

1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 Issuance ($B.) Issuance ($B.) At US$535B in 1Q17, U.S. syndicated lending was up 5 yoy and down 8% vs. 4Q16; new money lending was down 38% vs. 4Q16 and down 22% yoy 70 60 U.S. loan issuance I-Grade Leveraged Other 275.0 25 225.0 U.S. new money lending I-Grade Leveraged Other 50 20 40 175.0 15 30 125.0 10 20 75.0 10 5 25.0 10

REUTERS / Jean-Paul Pelissier REUTERS / Firstname Lastname LEVERAGED LENDING The race for repricings The typical things that you want for the asset class are all there: low default rates, high historical returns over the last 12-24 months and increasing interest rates. Those three things do not happen at the same time that often and could mean a huge boom in issuance. But, the product is just not there, said one arranger.

1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 Issuance ($B.) Issuance ($B.) Leveraged loan refinancings climbed to $261B, surpassing 2Q13 s $246B record It seems there could be a lot more downside than upside on the M&A front if you look at the leveraged market, said one arranger. New money deals mainly came from corporations selling divisions to sponsors. We are seeing pruning going on, spinning off from larger entities but not transformative transactions. 30 25 Leveraged refinancings 16 14 12 Leveraged new money New Money-M&A New Money-Other 20 10 15 8 10 6 4 5 2 12

1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 Lev. loan issuance ($B.) Institutional loan issuance jumped 55% in 1Q17 to $248B on the back of refinancings; pro rata was down 15% in 1Q17 to $97B 30 Leveraged pro rata Leveraged loan issuance: pro rata vs. institutional Leveraged institutional 25 20 15 10 5 13

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 Issuance ($B.) % of survey respondents Outlook: Leveraged pro rata loan issuance expected to be steady to up in 2017 Leveraged pro rata ended 2016 at $461B and is expected to remain consistent or climb to the $500B range 60 Leveraged pro rata loan issuance Refinancing New Money (M&A) New Money (Other) 8 Full year 2017 Lev. pro rata issuance estimates 50 7 40 30 6 5 4 20 10 3 2 1 <$450 $500 $550 >$600 2017 Lev. pro rata issuance estimates ($B.) 14

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 2014 Forecast 2015 Forecast 2016 Forecast 2017 Forecast 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 2014 Forecast 2015 Forecast 2016 Forecast 2017 Forecast Issuance ($B.) Issuance ($B.) Institutional refis reached $195B while new money was $54B in 1Q17 Institutional loan issuance: refinancings Institutional loan issuance: new money 45 35 40 30 35 30 25 25 20 20 15 15 10 10 5 5 15

4-Jan-12 4-Mar-12 4-May-12 4-Jul-12 4-Sep-12 4-Nov-12 4-Jan-13 4-Mar-13 4-May-13 4-Jul-13 4-Sep-13 4-Nov-13 4-Jan-14 4-Mar-14 4-May-14 4-Jul-14 4-Sep-14 4-Nov-14 4-Jan-15 4-Mar-15 4-May-15 4-Jul-15 4-Sep-15 4-Nov-15 4-Jan-16 4-Mar-16 4-May-16 4-Jul-16 4-Sep-16 4-Nov-16 4-Jan-17 4-Mar-17 Share of loans bid =>100 6 of all multi-quote term loans are bid at par or higher, down from a peak of 65% 9 Daily U.S. par-plus share of multi-quote institutional term loans 8 7 6 5 4 3 2 1 TR LPC s Leveraged Loan Monthly plus Special Reports on CLO Trading Activity and sector deep-dives, provide both loan stats and trends on underlying CLO holdings across the U.S. and Europe 16

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 % of CLOs 33% of U.S. CLOs see weighted average bids on underlying assets climb to 99 or higher, down from 37%, as secondary rally slowed 10 9 8 7 Share of U.S. CLOs by weighted average bid on their assets <97 97 to <98 98 to <99 >=99 6 5 4 3 2 1 LPC Collateral allows loan and CLO traders, to search all loan holdings of CLOs by manager, vehicle, or across spread, industry, trade levels, and more 17

1Q97 4Q97 3Q98 2Q99 1Q00 4Q00 3Q01 2Q02 1Q03 4Q03 3Q04 2Q05 1Q06 4Q06 3Q07 1Q-3Q09 2Q10 1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 Avg. first lien spread (bps) Number of institutional facilities Meanwhile, leveraged loan spreads fell to lowest levels post-crisis 60 Avg. first lien institutional loan spread (bps) 70 # of downward flexes 55 60 May 13 50 45 40 35 30 25 50 40 30 20 10 20 0 18

1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 1Q97 4Q97 3Q98 2Q99 1Q00 4Q00 3Q01 2Q02 1Q03 4Q03 3Q04 2Q05 1Q06 4Q06 3Q07 1Q-3Q09 2Q10 1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 Yield (3-year term) Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 Yield (3-year term) Yield (3-year term) Primary yields dropped in 1Q17 on refi wave; ticking up now as deal mix changes 8% 7% 6% 5% 4% 3% B B, BB yields: monthly BB 12% 1 8% U.S. institutional primary yields LIB/LIB floor LIB spread OID 6% 8% 7% 6% 5% 4% 3% B, BB yields: quarterly B BB 4% 2% 19

Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 Number of flexes Average flex Downward flex continues to dominate 40 Monthly institutional loan flex activity # of flexes up/down Avg. yield adjustment up/down 3% 30 20 2% 10 0-10 -20-30 -40-50 1% -1% -2% -60-3% 20

1Q05 2Q06 2Q07 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Average flex score Cov-lite volume ($B.) % of volume TRLPC s Flex Factor tracked issuer friendly conditions via price and structural changes 4.0 3.0 2.0 Flex Factor Investor friendly 16 14 12 Cov-lite volume Overall Cov-lite Vol. % of Institutional Volume % of Leveraged Volume 10 9 8 7 1.0 10 6 8 5-1.0-2.0 Issuer friendly 6 4 4 3 2 2 1 TR LPC s Flex Factor measures investor sentiment in the leveraged loan market by assigning points to both price and structural flexes in the primary market. The higher the flex score are on a deal, the more price and structural changes were required to get that deal done. 21

1H03 2H04 3Q05 2Q06 1Q07 4Q07 1H10 1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 Equity contributions (%) LBO debt to EBITDA (X:1) Share of LBO deals Half of new LBOs are levered 6 times or higher Survey: The role of direct lending for larger borrowers will Not change: growth will be focused on middle market issuers, said 27% of respondents Diminish: regulatory environment will ease under new administration, said 18% of respondents Grow: no one else can do tougher credits, said 55% of survey respondents Equity contributions vs. leverage levels Share of all LBOs with total leverage >6x 5 45% Equity Contribution Debt to EBITDA 7.0 6.5 6.0 7 6 Leverage > 6x Leverage > 7x 4 5.5 5 5.0 4 35% 4.5 3 3 4.0 2 3.5 1 25% 3.0 22

Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 $ Bils. What fuels this, the usual (visible) suspects? 2 18.0 16.0 14.0 12.0 1 8.0 6.0 4.0 2.0-2.0-4.0-6.0-8.0 Monthly CLO issuance vs. retail fund flows CLO Issuance Loan fund flows 23

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Issuance ($B.) % of survey respondents Demand remains strong: CLO issuance has climbed past $25B YTD and is expected to be in the $60B-$70B range in 2017 14 Annual CLO issuance 5 Full year 2017 CLO issuance estimates 12 10 8 6 4 2 45% 4 35% 3 25% 2 15% 1 5% $55-$60 $60-$65 $65-$70 >$70 2017 CLO issuance estimates ($B.) 24

Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 Sep-15 May-16 Jan-17 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 Issuance ($B.) % of survey respondents Issuance ($B.) Responses are widely dispersed, expecting CLO issuance in the second quarter to land between $12B and $20B Monthly CLO issuance 2Q17 CLO issuance estimates CLO refis & resets 16.0 6 25.0 Resets 14.0 12.0 5 2 Refinancings 1 4 15.0 8.0 3 6.0 4.0 2.0 2 1 1 5.0 <$12 $12-$15 $15-$20 >$20 2Q17 CLO issuance estimates ($B.) 25

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 AAA Discount Margin* bps CLO Aggregate Principal Balance ($B.) CLO assets under management are climbing steadily toward $450B 19 AAA spreads continue to tighten 450 CLO assets under management climb past $445B 18 17 400 16 350 15 14 300 13 250 12 11 200 10 150 *Based on a sample of deals where discount margin available 26

Jan Jan Feb Mar Mar Apr May May Jun Jul Jul Aug Sep Sep Oct Oct Nov Dec Jan Jan Feb Mar Mar Apr May May Jun Jul Jul Aug Sep Sep Oct Oct Nov Dec $ Bils. $ Bils. Is it 2013 yet? 1,50 1,00 Weekly retail fund flows 2014 2015 2,50 2,00 Weekly retail fund flows 2013 2016 2017 50 1,50 1,00-50 -1,00 50-1,50-2,00-50 -2,50-1,00 27

Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 AUM ($B.) Loan fund assets under management approach $150B, inching toward March 2014 s peak $174B 180 160 140 Loan fund assets under management 120 100 80 60 40 20 0 28

2013 Actual 2014 Actual 2015 Actual 2016 Actual 2017 Actual 2015 Forecast 2016 Forecast 2017 Forecast M&A share of issuance % of survey respondents Outlook: Lenders surveyed expect M&A will make up 38% of issuance; in 1Q17 M&A made up 15% of issuance M&A as % of leveraged loan issuance Near term outlook 45% 4 7 The institutional calendar will What will be the driver? 35% 6 3 25% 2 15% 1 5% 5 4 3 2 1 Go down Stay the same Go up M&A Mix Refis 29

REUTERS / Jean-Paul Pelissier REUTERS / Firstname Lastname IT S ALL ABOUT THE MIDDLE MARKET! Has record fundraising set unmanageable expectations? TR LPC has combined its syndicated deals data with private deals to provide issuance, terms, and conditions and credit metrics across the entire middle market for the first time BDC Collateral was created to provide transparency across BDC holdings

MM debt fundraising ($B.) 2016 was a banner year for MM debt fundraising at $57.8B (w/mezz); $18B YTD Accelerated fundraising has resulted in a severe supply/demand imbalance, said one arranger. What is your opinion on the fundraising environment for middle market loans in 2017? Middle Market Direct Lending Capital Raised What fundraising strategy is most in vogue in the middle market right now? Only well established players can raise money this year 7 6 5 Mezzanine Total Debt Raise Estimate Separately managed accounts Private credit funds Middle market is a hot spot; fundraising will remain strong 4 3 Private BDCs MM CLOs Expecting fundraising to slow down meaningfully 2 1 Joint ventures Public BDCs 25% 5 75% 10 % of respondents 2014 2015 2016* 2017E * Started tracking mezzanine in 2016 1 2 3 4 5 % of respondents 31

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 MM CLO Issuance ($B.) % of respondents 2016 MM CLO issuance of $8.4B was the highest level tracked post credit crisis; $4.74B in MM CLOs have been issued so far this year 24.0 22.0 Middle market CLO issuance 3 2017 Lender Survey: 2017 MM CLO issuance expectations 2 25% 18.0 16.0 2 14.0 12.0 15% 1 8.0 1 6.0 4.0 5% 2.0 < $5.0B $5-6B $6-7B $7-8B $8-9B > $9B 32

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 % of respondents who said yes to each type % of respondents who said yes to each type As an agent, which investors do you target? Regulated Players Non-regulated Players 10 9 8 7 6 5 4 3 2 1 Asset-Based Lenders Foreign Banks Regional Banks 10 9 8 7 6 5 4 3 2 1 BDCs Specialty Finance Co's Other Investors CLOs Hedge Funds Survey Date Survey Date 33

% of respondents Only 25% of respondents said they met their 1Q17 lending goal Did you reach your 1Q17 lending goal? Those that fell below their goals attributed to: 8 7 Bank Non Bank Lack of volume Terrible deal structures / terms Pricing too low Aggressive competition 6 Could not compete on aggressive leverage levels 5 Too many repricings Poor credit quality 4 Corporates sat on sidelines Too many lenders with large hold size 3 Banks were aggressive, which amped the competition 2 Those that met their goals attributed to: Strong origination efforts 1 Early commitments Relationships Saw more dealflow Yes No Had a strong backlog from 4Q16 Went up market 34

% of respondents However, majority of respondents are confident they will meet their lending goals this year in part due to more modest targets 9 Will you meet your 2017 lending goal? Why will you not meet your goal? Too much competition coupled with Capital from non-banks 8 7 Banks Non-Banks Large budgets Continued conservatism limits eligible deals Demand outpacing supply of deals 6 5 4 3 Conservative credit culture Why will you meet your goal? Markets should become a little more volatile which will help direct lenders to step in Set more modest goals this year; the bar was lowered for 2017 given the significant runoff in 2016 2 1 Have the ability to step into BSL deals Regulated banks are getting more looks at the smaller sponsored deals as others move up market No Yes Have strong origination platform that is far-reaching Ability to source via sponsor relationships 35

(3) (20-3) (10-2) (0-1) 0-1 10-2 20-3 >3 (3) (20-3) (10-2) (0-1) 0-1 10-2 20-3 >3 % of respondents % of respondents How much more capital are you allocating to lend in the middle market? Banks said Non-banks said 9 45% 8 7 6 2016 Survey 2017 Survey 4 35% 3 2016 Survey 2017 Survey 5 25% 4 2 3 15% 2 1 1 5% YOY Percentage change YOY Percentage change 36

(3) (20-3) (10-2) (0-1) 0-1 10-2 20-3 >3 (3) (20-3) (10-2) (0-1) 0-1 10-2 20-3 >3 % of respondents % of respondents Respondents are more bullish on a pick-up in deal flow this year Banks said Non-banks said 8 2016 Survey 2017 Survey 7 2016 Survey 2017 Survey 7 6 6 5 4 5 4 3 3 2 2 1 1 YOY Percentage change YOY Percentage change 37

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 (3) (20-3) (10-2) (0-1) 0-1 10-2 20-3 >3 Issuance ($B.) % of respondents Combined sponsored lending (syndicated + private execution) was up 16% in 2016 to $112B, while corporates were down 7% yoy Middle market lending activity Will 2017 overall cash flow lending 25 Non-sponsored Sponsored Private Sponsored 8 Banks Non-Banks 7 20 6 5 15 4 3 10 2 5 1 YOY Percentage change 38

1Q03 2Q04 3Q05 4Q06 1Q08 2Q09 3Q10 4Q11 1Q13 2Q14 3Q15 4Q16 MM M&A Volume ($B.) % of respondents Sponsored M&A financings are expected to increase moderately this year for the combined syndicated and private middle market Sponsored M&A Issuance* Survey: Sponsored M&A financings in 2017 will 2 LBO Add-on acquisition 9 Banks Non-Banks 18.0 8 16.0 14.0 12.0 1 8.0 6.0 7 6 5 4 3 4.0 2 2.0 1 Moderate decrease (0-15%) Stay the same Moderate increase (+0-15%) Significant increase (> +15%) * Loan volume includes both syndicated and private execution beg. in 1Q14 YOY Percentage change 39

1Q00 2Q01 3Q02 4Q03 1Q05 2Q06 3Q07 4Q08 1Q10 2Q11 3Q12 4Q13 1Q15 2Q16 MM Corporate M&A Volume ($B.) % of respondents Outlook is mixed on whether non-sponsored M&A financings will see much growth in 2017 8.0 Non-Sponsored M&A Issuance 7 Survey: Non-Sponsored M&A financings will 7.0 6 Banks Non-Banks 6.0 5.0 4.0 3.0 2.0 5 4 3 2 1.0 1 Moderate decrease (0-15%) Stay the same Moderate increase (+0-15%) Significant increase (> +15%) YOY Percentage change 40

% of respondents Pipelines are not stellar; M&A is not expected to make up a large share of volume How would you characterize your pipeline for 2Q17? 6 How much of 2Q17 volume will be M&A driven? Very Strong Average Above average Very light 5 Banks Non Banks 4 2 23% 3 2 57% 1 0-25% 25-5 50-75% 75%-10 M&A as % of volume 41

Healthcare Business Services Technology Services Manufacturing Chemicals, Plastics Beverage, Food Automotive Wholesale Oil and Gas Media Retail & Supermkts Financial Services Leisure/Entertain. Telecom Utilities Construction Restaurants Consumer Services Aero/Defense Textiles and Apparel Shipping Paper & Packaging Distributors Transportation Forest Products Real Estate Food & Beverage Hotel & Gaming Agriculture Mining Business Services Technology Wholesale Healthcare Automotive Manufacturing Services Transportation Chemicals/Plastics Oil and Gas Construction Media Beverage/Food Leisure/Entertain. Consumer Financial Svcs. Utilities Restaurants Textiles/Apparel Shipping Telecom Paper & Pack. Loan volume ($Bils.) Loan volume ($Bils.) Which sectors come out ahead given the new administration? 16.0 2016 volume (syndicated + private execution) 6.0 1Q17 volume (syndicated + private execution) 14.0 12.0 1 8.0 6.0 4.0 2.0 1Q16 2Q16 3Q16 4Q16 5.0 4.0 3.0 2.0 1.0 42 Loan volume includes first lien, 2 nd lien, mezzanine and seller note volume

How are you feeling about the economy? What has been Trump s biggest effect on the loan market so far in 2017? Lender Survey: How are you feeling about the economy? Restoring real growth in the economy Increased optimism and confidence Not much change, mostly just entertaining His policies create uncertainty making investing more difficult 17% 6% Expecting strong accelerated growth Slow and steady growth will be sector specific 2Q17 Survey 1Q17 Survey 34% 43% Caution: Seeing some cracks in issuer performance 25% 5 75% 10 % of respondents 43

What is the biggest factor to winning a deal in today s environment? Banks said Non-banks said Hold level Hold level Willing to stretch the most on documentation and leverage levels Willing to stretch the most on documentation and leverage levels Reputation / relationships Offer the lowest pricing Most flexible on credit approval w/r/t sectors, issuer size, financing/security type, etc. Strongest origination platform Strongest origination platform Most flexible on credit approval w/r/t sectors, issuer size, financing/security type, etc. 1 2 3 % of respondents 2 4 6 % of respondents 44

% of respondents % of respondents What is your maximum hold size for middle market deals? Banks Non-banks 6 6 2016 Survey 2017 Survey 2016 Survey 2017 Survey 5 5 4 4 3 3 2 2 1 1 < $25 $25-$50 $50-$75 $75-$100 >$100 < $25 $25-$50 $50-$75 $75-$100 >$100 Maximum hold size for a MM deal ($M) Maximum hold size for a MM deal ($M) 45

1Q13 2Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 % of respondents % of issuance Which structure will sponsors favor? First lien/second lien is expected to gain favor given competitive landscape 6 5 Survey: Which structure will sponsors favor? 2016 2017 10 9 8 Data: Private/club lending by structure* 1st Lien/Mezz Stretch Sr. 1st/2nd Lien Unitranche 4 3 7 6 5 2 4 3 1 2 1 1st/2nd Lien Stretch Sr. 1st Lien/Mezz Unitranche *Loan volume includes first lien, 2 nd lien, mezz and seller notes 46

All-in-yield (3-year) Are yields commensurate with risk? Quarterly middle market yields across the capital structure 14. MM Institutional TL Yield (rated) MM Private: Bank TL MM Private: Non-Bank Traditional TL* Unitranche MM Private: "High Octane" Senior** MM Second Lien Mezz (Cash) Mezz (Cash + PIK) 13. 12. 11. 1% 9. 8. 7. 6. 5. 4. 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15* 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 *Non-bank traditional TL is for traditional senior deals priced below 600bps, breakout/spread ceiling began in 2Q15 **High octane senior is non-bank term loans that are not unitranche but rather senior deals for tougher credits priced 600bps and up 47

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Total Leverage Further structural deterioration is expected given ongoing supply/demand imbalance Structures/docs will improve because supply should pick up What is your expectation for structures and quality of documentation in 2017? 2017 Survey 2016 Survey 5.0x 4.8x 4.5x Avg. issuer D/EBITDA by arranger type Structures and documentation will deteriorate given supply demand imbalance 4.3x 4.0x 3.8x Remain the same 3.5x 3.3x Regulated Lender Non-regulated lender 2 4 6 8 % of respondents 3.0x 48

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 % of respondents Total LBO debt to EBITDA Where are leverage levels heading in 2Q17? 6 5 What is your expectation on issuer leverage levels in 2Q17? 7.0x 6.8x 6.5x LBO leverage by market segment Large Corp. Inst. MM Club MM 4 6.0x 6.3x 3 5.8x 5.5x 2 5.3x 5.0x 1 4.8x 4.5x Leverage will rise meaningfully Leverage will rise only mildly Remain the same Leverage levels to tighten 4.3x 4.0x 49

How are you expecting your portfolio to perform in 2017? What s troubling you? Almost 9 of respondents expect their portfolio health will be stable in 2017 Biggest concerns for 2017 include: terms and conditions, excessive capital in the middle market and deal flow! How are you expecting your overall portfolio to perform in 2017? Sector specific: some weaken, some strengthen Stable and steady growth Strengthen, growth picks up Weaken, growth is slowing What are you most concerned about for 2017? Terms and conditions/loose structures Number of new participants/competition Too little deal flow/supply Leverage levels too high Excessive ill-experienced capital seeking yields Pricing going too low Too much leverage on cyclicals Rising rates and how it will impact borrowing costs Overall credit quality Recoveries could be abysmal in the next down cycle Potential new aggressiveness due to regulatory relief Uncertainty of Trump s policies Retail inflows Very high public market valuations suppressing volume 50

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