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Borrowers and sponsors, in turn, increasingly appreciated private credit’s certainty of execution, flexibility, willingness to offer PIK options and delayed-draw term loans, and bespoke terms that facilitated navigating downturns. Recently, however, the environment has shifted again: As the broadly syndicated market came roaring back in 2024, credit spreads tightened significantly, especially for larger transactions that could be refinanced in the liquid credit markets. Some 67% of LBOs financed by direct lenders carried spreads between 500 and 600 basis points. These tighter spread levels, combined with 2024’s base rate cuts, will compress overall returns.
(Past performance is no guarantee of future results.)
Latest news
Q2'26 BDC analysis shows additional 184 bps of nonaccruals at cost
In a universe of 173 business development companies, or BDCs, Octus identified a total of $9.5 billion of debt (at cost) in nonaccrual status reported in the second quarter of 2026, a slight decline of 5% from $10 billion in the first quarter of 2026.
Reading the Board
The story changes depending on which numbers you’re counting.
Private Credit Defaults 101: Different Numbers, Different Stories
In Season 2 of Billions, Bobby Axelrod takes his lawyer Orrin Bach to an empty Yonkers racetrack in the dead of night.