Forbes reported, citing S&P Capital/CreditPro as the source, lenders were able to recover 81% of their investment on defaulted loans sized at less than $200 million for the period 2010 through 2013. By comparison, lenders recovered 74% of loans sized at $200 million or more.

In addition to higher yields, the better recovery rate offers another argument in support of using middle-market loans to buttress large-cap portfolios, despite their illiquidity.

Forbes notes that higher recoveries stem from typically tighter terms underwritten by lenders who book to hold. By contrast, Forbes said, terms for large-cap loans blow in the direction of prevailing market conditions at the time of syndication.

To read the full Forbes report, click here.