Assessing the current state of private credit

In some ways, the private credit landscape resembles conditions seen we last saw in 2021. Credit spread have tightened and syndicated markets have regaining activity in the last twelve months. Both markets are open for business with the syndicated markets recently regaining share that was ceded to private credit during 2022 and 2023. The theme that continues however is the convergence between the syndicated and private credit markets as we see deals shift fluidly between the two markets. Emerging themes also include a resurgence in junior capital deals, an increasing number of take-privates and the refinancing of capital structures with near-term maturities.

Adapting strategies to market dynamics

Flexibility of capital is essential in response to evolving market conditions. As syndicated markets regain momentum, private credit strategies pivot towards junior capital deals and smaller unitranches, reflecting a shift in deal structures and origination focus. As sponsors regain an appetite to look at add-on M&A, delayed draw term loans become more relevant in capital structures as well. This is where the flexibility of private credit can stand out in contrast to the syndicated market. This adaptive approach reflects our commitment to staying agile and responsive to changing market dynamics.

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