LBO leverage multiples hold steady, show signs of normalization in 1Q26

LSEG (1)
Content hub / Article / LSEG / 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. Junior-lien and/or unsecured debt accounted for nearly a half turn of leverage in the latest quarter, the largest contribution we’ve seen since 2Q25 and a shift from nonexistence throughout the back half of last year. The majority of buyout financings are still being structured with 100% senior secured first-lien debt supported with substantial equity cushion, although you’re starting to see some privately placed second-lien term loans and unsecured bonds in situations where such paper and economics make sense. That sometimes means rolling existing debt into the new capital structure, as was the case with Select Medical and to a much lesser extent Sealed Air. Electronic Arts was certainly the most notable new raise given its capacity-testing size and cross-border execution ($18bn total funded quantum with 80/20 split between dollars and euros), and provides a great reference point in showcasing relative value across the debt capital structure. The US$6.125bn dollar term loan B (7Y / S+350 / 98.5) printed with a 7.7% yield, or 43bp outside the US$2.875bn senior secured dollar notes (7Y / NC3 / 7.25%), while the US$2.5bn senior unsecured dollar notes (8Y / NC3 / 8.75%) printed 150bp behind the adjoining secured notes.     

Business development companies and the rise of balance sheet financing vehicles

Podcast

Business development companies and the rise of balance sheet financing vehicles

Fitch's Deb Murnin and Chelsea Richardson discuss the growing use of off-balance-sheet JVs and finance companies among BDCs, exploring the drivers, leverage impacts, portfolio risk profiles, and potential rating implications for Fitch-rated BDCs.
Listen
Private Debt Investor New York Forum

September 15-16, Hudson Yards, New York

Private Debt Investor New York Forum

Bringing together the investors, managers and advisers shaping the next phase of the market — 200+ allocators and $10.6 trillion of LP capital expected. Benchmark strategies, hear from leading LPs, and cut through market noise over two unmissable days.
Learn more
US Private Credit League Tables H1'26

Report

US Private Credit League Tables H1'26

The definitive rankings covering private credit activity in H1'26.
Download
PitchBook's Q2 2026 US PE Breakdown

Report

PitchBook's Q2 2026 US PE Breakdown

Software freezes and energy powers on as US PE deal value falls 38% in Q2 2026.
Download
Making sense of private credit defaults

Webinar

Making sense of private credit defaults

What does private credit default data really tell us? Join our exclusive webinar featuring experts from KBRA, Moody's, Fitch Ratings, and S&P Global to find out.
Register

Latest news

    Rate hike expectations ease as term SOFR curve flattens

    The CME six-month Term SOFR rate reached a recent high of 3.979% on July 28 before retreating to 3.837% as…

    Read More

    3Q26: New loan assets rise to 44% of total lending, a 3-year high

    New loan assets as a proportion of total US loan volume make up 44% of the 3Q26 pipeline to date,…

    Read More

    North American GPs dominant as fundraising accelerates

    Our PEI Private Credit 200 ranking also shows capital raising increasing overall – and accelerating especially fast for the largest…

    Read More