During the second quarter of 2016, acquisitive middle-market issuers capitalized on lenders’ increased risk appetite by entering into attractively priced and structured financings. The dramatic rally in Treasury yields (and other safe haven assets) triggered by the “Brexit” referendum at quarter’s end, augurs well for further improvement in domestic credit market conditions.

1. Industry Insights:
Capital Markets
Q2 2016
Highlights
Credit providers vigorously pursued well-structured offerings by middle-market
issuers throughout the second quarter
Demand for new issuance was driven by a strong crossover bid, a build-up of credit
fund “dry powder” and modestly growthful macroeconomic conditions
Acquisitive middle-market issuers capitalized on lenders’ increased risk appetite
by entering into attractively priced and structured financings, including facilities
consisting of both immediately drawn and open ended acquisition tranches
While U.S. monetary policy took center stage briefly in June, weak labor market data
kept the Fed largely on hold throughout the quarter
The dramatic rally in Treasury yields (and other safe haven assets) triggered by the
“Brexit” referendum at quarter’s end, augurs well for further improvement in domestic
credit market conditions

2. Middle-market issuers enjoyed another quarter of strong demand from credit providers.
Competition among lenders for new offerings triggered a rally in pricing, covenant protection,
and, in particular, prepayment terms. Further, leverage levels moved up by approximately a
half turn of EBITDA over the prior quarter.
Investment demand was strong among most genres of private market participants, in
particular credit funds approaching investment period limits. Crossover interest from high-
yield and leveraged loan buyers, resulting from a modest pace of large cap deals, added
further to competition for middle-market new issuance.
We observed a marked increase in risk appetite this quarter among commercial banks in
transactions offered by Duff & Phelps. Conversely, we noted continued tepid demand from
the mainstream BDC community.
Opportunistic borrowers have increasingly called on us to provide financing in support
of contemplated bolt-on acquisitions. Such financings oftentimes are structured as dual-
tranche facilities that include both an immediately drawn portion and an unfunded acquisition
line. The combination of attractively priced debt and modest macroeconomic growth
suggests continued activity of this type in the coming quarter.
We believe market conditions for middle-market issuers are compelling. Attractive base
interest rates, credit spreads, leverage levels and prepayment terms allow issuers to
craft contracts tailored to reflect idiosyncratic priorities. While exogenous risks—“Brexit”
contagion, energy supply disruptions, terrorist attacks—remain chronic concerns, risk
appetite among credit providers continues to be keen.
Capital Markets Industry Insights – Q2 2016
Executive Summary
Duff & Phelps 2
Indicative Middle-Market Credit Parameters
Leverage Multiples EBITDA of $10MM - $20MM EBITDA of $20MM - $50MM
Senior Debt
2.50x - 3.50x
2.25x - 3.25x
3.00x - 4.00x
2.50x - 3.50x
Total Debt
4.00x - 4.50x
3.75x - 4.25x
4.50x - 5.50x
4.00x - 5.00x
Pricing EBITDA of $10MM - $20MM EBITDA of $20MM - $50MM
First Lien
Libor + 2.75% - 3.50% (bank)
Libor + 3.00% - 4.00% (bank)
Libor + 4.00% - 6.00% (non-bank)
Libor + 2.50% - 3.25% (bank)
Libor + 2.75% - 3.50% (bank)
Libor + 4.00% - 6.00% (non-bank)
Second Lien Libor + 6.50% - 9.50% Libor + 6.00% - 9.00%
Subordinated Debt 11.00% - 13.00% 10.00% - 12.00%
Unitranche Libor + 6.50% - 9.00% Libor + 6.00% - 8.50%
Note: Data in red reflects change vs. Q1, if applicable.

3. New Issuance
The number of high-yield issuances this quarter
reflected a modest decline in activity. (However,
dollar volume improved due to a handful of
aberrational large offerings). The number, and,
to a greater extent, dollar volume of new loan
issuance improved this quarter as a result of
pent up demand and increasing risk appetite.
Total High-Yield Bond Issuance
Duff & Phelps 3
0
2Q161Q164Q153Q152Q151Q154Q143Q142Q141Q144Q133Q132Q131Q134Q123Q12
Number of Deals
111.2
90.9 88.1
124.8
103.2
90.9
82.6
113.5
104.8
59.1
72.8
116.3
105.2
52.2
Total Bond Volume ($B)
109.2
133.8
$0
$50
$100
$150
2Q161Q164Q153Q152Q151Q154Q143Q142Q141Q144Q133Q132Q131Q134Q123Q12
100
200
300
400
500
137141
158
220
312
327
290282283
302
362
344347
370
320
409
Total Loan Issuance
$0
$100
$200
$300
$400
$500
$600
$700
2Q161Q164Q153Q152Q151Q154Q143Q142Q141Q144Q133Q132Q131Q134Q123Q12
Number of Deals
319.7
506.3
596.1
531.6
543.8
467.7
587.1
450.0
592.6
386.7
591.3
532.2 539.6
356.9
592.2
808
1,123
887
1,103
1,014
1,047
959
1,116
994
1,033
864
1,071
985
757
850
Total Loan Volume ($B)
600
800
1,000
1,200
1,400
490.4
784
Source: SDC Platinum
Source: SDC Platinum
Capital Markets Industry Insights – Q2 2016

4. New Issuance - Continued
Duff & Phelps 4
Total Loan Issuance (EBITDA < $50MM)CLO issuance rebounded to levels seen
in the third and fourth quarters of last
year, in terms of both number and volume.
Leveraged loan funds remained largely
constant. High-yield bond funds, however,
continued to experience net outflows.
$0
$50
$100
$150
$200
$250
$300
$350
2Q161Q164Q153Q152Q151Q154Q143Q142Q141Q144Q133Q132Q131Q134Q123Q12
Number of Deals
140.1
259.6
295.1
213.4
244.2
263.5
282.1
198.9
227.0
148.0
263.3
207.2
226.5
160.0
254.9
618
868 856
771
664
796
754
774
869
659
767
668
798
744
589
645
Total Loan Volume ($B)
500
750
1,000
1,250
220.1
591
669
Source: SDC Platinum
High-Yield Bond Mutual Fund Flows
($20)
($15)
($10)
($5)
0
$5
$10
$15
Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16
Total Fund Flows ($B)
Source: Investment Company Institute
Capital Markets Industry Insights – Q2 2016

5. New Issuance - Continued
Duff & Phelps 5
Leveraged Loan Mutual Fund Flows
($8)
($4)
$0
$4
$8
$12
Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16
Total Fund Flows ($B)
Source: Lipper FMI
Total CLO Issuance
2Q161Q164Q153Q152Q151Q154Q143Q142Q141Q144Q133Q132Q131Q134Q123Q12
Number of Issuances
26.3
24.6
22.6
38.3
32.4
30.7 30.8
28.6
18.9 19.6
8.2
18.0
16.0 17.0
Total Volume ($B)
23.6
10.7
26
46
52
34
36
45
53
69
63
58 57
55
36
40 42
20
$0 0
20
40
60
80
$10
$20
$30
$40
$50
$60
Source: SDC Platinum
Capital Markets Industry Insights – Q2 2016

6. Yields
U.S. Corporate High-Yield Bonds & Leveraged Loans
2 Year vs. 10 Year Treasury Spread
Capital Markets Industry Insights – Q2 2016
Yields on high-yield bonds and leveraged
loans rallied 90 bps and 80 bps, respectively,
during the quarter. Modestly positive
economic growth, benign monetary policy
and tepid labor market conditions all
contributed to the rally. The rally accelerated
sharply in the last two weeks of the quarter on
the heels of the “Brexit” vote and subsequent
flight to quality.
Spreads between high-yield bonds and
leveraged loans tightened significantly since
the yield spike at the beginning of 2016.
Spreads narrowed approximately 145 bps
since January, as the risk of fixed rate versus
floating rate debt diminished.
The spread between the two year and the
ten year Treasury yields narrowed further,
reflecting the expectation of a continued low
interest rate environment.
Yield
4.5%
5.5%
6.5%
7.5%
10.5%
9.5%
8.5%
Jun-12
Barclays U.S. Corporate High-Yield
S&P/LSDA U.S. Leveraged Loan 100 All Loans
Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16
0
50
100
150
200
250
300
Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16
Spread (bps)
Duff & Phelps 6
Source: SDC Platinum
Source: SDC Platinum

7. Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16
0.0%
1.0%
2.0%
3.0%
4.0%
Yield 2 year
5 year
10 year
Yields - Continued
Duff & Phelps 7
2, 5, and 10 Year Treasury Yields
Acquisition Financing/Dividend Recapitalization
Leverage multiples for middle-market
change-of-control financings regained
the recent highs seen in the second half
of 2015. While traditional senior lenders
generally held to leverage levels of the
prior quarter, second lien and subordinated
lenders increased total leverage appetite by
approximately half a turn of EBITDA.
Leverage Multiples (EBITDA < $50MM)
First Lien
Second Lien
Subordinated
4.3x 4.4x
4.9x 4.7x
5.3x
4.5x
4.7x
5.1x 5.2x
4.8x 4.8x
4.4x
5.6x
4.9x
5.7x
5.5x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 1Q164Q15
Debt/EBITDA Multiple
2Q16
Capital Markets Industry Insights – Q2 2016
Source: SDC Platinum
Source: SDC Platinum

8. 2Q164Q153Q152Q151Q154Q143Q142Q141Q144Q133Q132Q131Q134Q123Q12
Total Loan Volume ($B)
$0.0
$15.0
$20.0
$25.0
$10.0
$5.0
1Q16
$14.7
$9.5
$16.2 $16.7
$13.0
$3.9
$8.8
$6.3
$14.0
$0.2
$13.7
$21.3
$10.5
$2.2
$14.6
$15.3
2.72.62.7
2.72.8
409
2Q164Q153Q152Q151Q154Q143Q142Q141Q144Q133Q132Q131Q134Q123Q12
Total M&A Volume ($B)
$0.0
$6.0
$8.0
$10.0
$4.0
$2.0
1.0
2.6
1.8
3.4
4.2
5.0
1Q16
Number of Deals (Thousands)
$5.9
$6.5
$6.8
$7.3 $7.1
$5.9
$8.8
$6.7
$5.5
$4.1
$7.1
$4.5
$9.5
$5.6
$6.3
$5.1
2.6
2.7
2.3
2.5
2.4
2.62.7
2.42.5 2.6
2.7
2.1
2.8
2.1
2.62.6
409
Acquisition Financing/Dividend Recapitalization - Continued
Leveraged recapitalizations resurfaced
this quarter, after two quarters of de
minimis activity. Exit constraints (most
notably, a tepid IPO environment)
combined with strong credit conditions
suggest a strong environment for recaps
in the coming quarter.
Source: SDC Platinum
Middle-Market M&A Volume (Target EBITDA < $50MM)
Loan Issuance for Dividend Recapitalizations
Duff & Phelps 8
Capital Markets Industry Insights – Q2 2016
Source: SDC Platinum

9. Macroeconomic Update
U.S. Real GDP Growth
Duff & Phelps 9
Muted hiring, in conjunction with low inflation
readings, hampered the Fed’s plans for a
June rate hike. The Fed remains data driven,
with markets now expecting just one rate
hike this year.
The U.S. economy grew at a 2.1% rate in the
quarter, representing a modest improvement
over the prior quarter. Equity markets were
volatile, particularly in June, but indexes
ultimately increased approximately 1.5%, on
average. Meanwhile, commodities continued
the rally begun in the first quarter, with gold
and oil prices up 18% and 7%, respectively.
In spite of significant volatility, most notably
in June, the quarter ended positively.
The recent referendum in Great Britain to
exit the European Union, surprised investors
(and policy makers). The “Brexit” vote
triggered a dramatic flight to traditional safe
haven assets, resulting in sharp rallies in
U.S. Treasury and precious metal markets,
in particular. M&A activity, as well as bank
lending, in the UK has already slowed,
pending further policy clarity. (At this writing,
the contemplated pace of UK decoupling
from the EU is slowing, with market
conditions having already largely reverted to
pre-“Brexit” circumstances).
Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16
0.5%
0.0%
1.0%
1.5%
4.0%
2.0%
2.5%
3.0%
3.5%
GDP Growth Rate
Source: Federal Reserve Bank of St. Louis
Capital Markets Industry Insights – Q2 2016

10. For more information please visit:
www.duffandphelps.com
About Duff & Phelps
Duff & Phelps is the premier global valuation and corporate finance advisor with expertise in complex valuation, dispute and legal management
consulting, M&A, restructuring, and compliance and regulatory consulting. The firm’s more than 2,000 employees serve a diverse range of
clients from offices around the world.
M&A advisory, capital raising and secondary market advisory services in the United States are provided by Duff & Phelps Securities, LLC.
Member FINRA/SIPC. Pagemill Partners is a Division of Duff & Phelps Securities, LLC. M&A advisory and capital raising advisory services
are provided in a number of European countries through Duff & Phelps Securities Ltd, UK, which includes branches in Ireland and Germany.
Duff & Phelps Securities Ltd, UK, is regulated by the Financial Conduct Authority.
Contact Us
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U.S. Contacts
Michael Brill
Head of U.S. Private Capital Markets
+1 212 871 5179
michael.brill@duffandphelps.com
Bob Bartell, CFA
Global Head of Corporate Finance
+1 312 697 4654
bob.bartell@duffandphelps.com
Steve Burt
Global Head of M&A
+1 312 697 4620
steve.burt@duffandphelps.com
Dave Althoff
Global Co-head of Industrials M&A
+1 312 697 4625
david.althoff@duffandphelps.com
Josh Benn
Global Head of Consumer, Retail, Food,
and Restaurants
+1 212 450 2840
josh.benn@duffandphelps.com
Brian Cullen
Head of U.S. Restructuring
+1 424 249 1645
brian.cullen@duffandphelps.com
Brooks Dexter
Global Head of Healthcare M&A
+1 424 249 1646
brooks.dexter@duffandphelps.com
Kevin Iudicello
Managing Director, Technology M&A
+1 650 354 4065
kiudicello@pmib.com
Jon Melzer
Global Co-head of Industrials M&A
+1 212 450 2866
jon.melzer@duffandphelps.com
Jim Rebello
Global Head of Energy M&A
+1 713 986 9318
james.rebello@duffandphelps.com
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Ross Fletcher
Head of Canada M&A
+1 416 361 2588
ross.fletcher@duffandphelps.com
Brian Pawluck
Managing Director, Canada Restructuring
+1 416 364 9756
brian.pawluck@duffandphelps.com
UK Contact
Ken Goldsbrough
Managing Director, European Debt
Advisory
+44 (0) 20 7089 4890
ken.goldsbrough@duffandphelps.com
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Duff & Phelps provides our clients worldwide institutional investor coverage, with dedicated Capital Markets teams resident in New York,
London and Hong Kong. Our comprehensive footprint allows us to access capital in all geographies and across the panoply of investment
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