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Lower middle-market lenders held their risk/return edge over larger deals in the second quarter. The premium spread per turn of leverage over large-cap credits held at 46.5 bps in Q2’26, within the 39–51 bps band LMM lenders have commanded since Q1’24. The premium over upper middle-market deals climbed to 32.4 bps in Q2’26, the widest gap in the series and nearly double Q1’24’s 18.7 bps. In three of the last four quarters the premium cleared 28 bps, a level never reached prior to Q3’25.
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Riding the Wave
Momentum, more often than conviction, drives the biggest deals. Source: PitchBook
Fitch Ratings Completes Peer Review of 13 US BDCs
Fitch Ratings has completed a peer review of 13 U.S. business development companies (BDCs). We have affirmed the Long-Term Issuer Default Ratings (IDRs) on 12 issuers and completed one Review No Action. The Rating Outlooks are Negative for three BDCs and Stable for 10 BDCs in this peer group.
Business of Private Credit: Playing to Your Strengths
“Show me a great credit, and I’ll show you a great sponsor behind it.”
For this series, we’ve focused on how core middle market lenders underwrite borrower. But before the lender ever sees the deal, a sponsor has already spent months, sometimes years, evaluating whether this was a company worth owning.