As we highlighted last week, the zero-rate period post-GFC allowed private equity firms to buy companies with higher leverage and sell them at higher multiples. For the largest direct lenders, this included mega software businesses with increasingly borrower-friendly financing terms.
Reality returned in 2022 as SOFR soared from zero to 5%. Financing costs became headwinds, borrower leverage shrunk, and the upward march of purchase price multiples halted. Public credit markets shut down. Private markets remained open, but with M&A slowing, competition among upper-market lenders surged, resulting in 60% portfolio overlap (see Chart of the Week).
Quote of the Week
“If you start meeting redemptions that are too large, what does the surviving portfolio look like?” – Michael Anderson, global head of credit strategy, Citigroup Inc. (Bloomberg).
Featuring Charts
Chart of the Week: Different Strokes
Core and LMM portfolio overlap has remained relatively stable over the past decade. Source: Company filings and Raymond James research
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Chart of the Week: Leverage Takeover
Middle market buyout financings increasingly dominated by direct lenders. Source: LSEG LPC. Middle Market LBO volume.
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Chart of the Week: Perception is Reality
Investors bombarded with scary headlines worrying less about real private credit risks. Source: PitchBook
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Chart of the Week: The IT Factor
IT deals commanded a larger piece of the M&A pie in 2025. Source: PitchBook
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Chart of the Week: Leading the Way
The US was a relative bright spot in global private equity fundraising in 2025. Source: Preqin, McKinsey analysis
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Chart of the Week: Clearing the Backlog
US and European exits were on the rise in 2025. Source: Dealogic, Bain & Company
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Bloomberg: Leveraged Lending Insights – 4/6/2026
Lenders Offer Deeper Discounts to Clear Primary Market Transactions Click here to access Bloomberg’s US Leveraged Finance Chartbook Amid subdued deal flow and continued volatility in the secondary market, lenders have increasingly relied on deeper original issue discounts (OIDs) to successfully syndicate new leveraged loan transactions. In March, the OID (original issue discount) on US…
PDI Picks – 4/6/2026
Five key takeaways from the secondaries market The rise of the GP-led deal and suspicion over valuations are among the themes emerging from our latest study of secondaries. With secondaries activity thriving across alternative asset classes, the latest Global Market Survey 2026 from Private Debt Investor’s affiliate title Secondaries Investor reveals the following insights:… Subscribe
Leveraged Loan Insight & Analysis – 4/6/2026
LBO leverage multiples hold steady, show signs of normalization in 1Q26 Although leverage multiples on recent large cap LBOs have eased marginally, averaging 5.5x in 1Q26 versus 5.6x in 4Q25, debt composition has shown signs of normalization…. Subscribe to Read MoreAlready a member? Log in here...
The Pulse of Private Equity – 4/6/2026
PE-backed company inventory by deal year Download PitchBook’s Report here. As of Q4 2025, the US PE inventory has grown to over 13,143 companies. At the pace of exits seen in 2025, this translates to over an 8.1-year inventory, which is a faster cycling of PE assets than when calculated with the annualized H1 2025 exit…
Middle Market & Private Credit – 4/6/2026
US Private Credit Transparency Improves Amid Interconnectedness Risks Click here to learn more. In recent years, bank and insurance regulators have pushed for more private credit disclosure in response to emerging risks. For life insurers, potential risks include meaningful investment exposure, capital adequacy for privately rated investments and potential conflicts of interest associated with growing…
Middle Market Deal Terms at a Glance
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