The surprise of 2025’s post-Liberation Day risk-on dynamic across markets has established a pattern we expect to continue well into next year. As we discussed last week, the implementation of rate cuts, the slowing of inflation and the persistence of economic growth has supported dealmakers and their financing partners.
Nevertheless, attention is focused on transactions closed during the highest rate period from 2022 – 2024. It had been forewarned that defaults should be expected emerging from that time. And so now every story of a troubled deal triggers warnings of a coming credit crisis...
“A data dependent Fed would come to the conclusion that it should not cut interest rates next week.” – Torsten Slok, chief economist, Apollo Global Management. (The Daily Spark).
Featuring Charts
Chart of the Week: Higher Ground
Direct lending goes into 2026 with a head of steam on deal formation. Source: PitchBook LCD, LCD News, The Daily Shot
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Chart of the Week: Easing Down
Defaults for the overall leveraged loan market are at lowest point since 2023. Source: The Daily Shot, PitchBook/LCD, Morningstar LSTA US Leveraged Loan Index
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Chart of the Week: Prime Cut
A low probability just weeks ago, chances for a 25 bp cut now seem likely. Source: The Daily Shot
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Chart of the Week: Lower for Longer
Direct lending defaults lead credit categories in low defaults, though headed higher. Source: KBRA DLD Default Research
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Chart of the Week: Higher for Longer
Larger LBO financings in direct lending are sporting increasingly higher leverage. Source: KBRA DLD Research, 3-month rolling averages
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Chart of the Week: Gone Fishing
On November 5th, the 2025 government shutdown became the longest in US history. Source: The Daily Shot
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Features
The Pulse of Private Equity – 12/15/2025
PE take-private deal activity Download PitchBook’s Report here. Middle-market take-private activity dwindled in Q3, with PE buyers underwriting just four announced or completed deals under $1 billion across North America and Europe…. Subscribe to Read MoreAlready a member? Log in here...
Leveraged Loan Insight & Analysis – 12/15/2025
US primary market loan yields tighten in December The average primary market yield, assuming a 3-year term to repayment on first-lien institutional term loan Bs, decreased 26bp to 6.73% so far in December, down from 6.99% in November…. Subscribe to Read MoreAlready a member? Log in here...
PDI Picks – 12/15/2025
The pros and cons of evergreen funds Liquidity has become highly prized in private markets, but a traditionally illiquid asset class such as private credit cannot easily adapt to the demand. One of the clear trends of 2025 has been an increasing demand for liquidity, even within private markets where the illiquidity premium has long…
Middle Market & Private Credit – 12/8/2025
US Life Insurer Investment Risk Rising from Private Letter Ratings Click here to learn more. Join Fitch for the upcoming Outlook panel: 2026 Leveraged Finance Credit Outlook Webinar Signs of emerging bubbles have increased in 2025 amid robust investor risk appetite, high market valuations, a rush of capex in AI-related industries and continued growth in…
Bloomberg: Leveraged Lending Insights – 12/8/2025
US Leveraged Loans Return 4.86% Through November The Bloomberg US Leveraged Loan Index (Ticker: LOAN) returned 0.35% in November, bringing its year-to-date return to 4.86%. Average secondary market prices on US leveraged loans were 96.64 on November 28th after declining 11bps from the October 31st figure of 96.75…. Subscribe to Read MoreAlready a member? Log
Middle Market Deal Terms at a Glance
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Beginning in July 2022 The Lead Left published a series of articles on credit market. This report consolidates those articles.
Cov-lite trends Inflation & rising interest rates – LIBOR to SOFR transition Mega-tranche uni trend ESG takes center stage Login to view interactive report and download PDF version. … Subscribe to Read MoreAlready a member? Log in here Related posts: 2H 2021 Midyear Outlook Report State of the Capital Markets – Fourth Quarter 2016 Review and
Beginning in September 2021 The Lead Left published a series of articles on supply chain. This report consolidates those articles.
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