Alert
Mid-2025 Debt Markets: What Borrowers and Lenders Need to Know
September 9, 2025
Authors
Philip A. Herman
Director, Boston
pherman@goulstonstorrs.com+1 617 574 4114
Jesse Rubinstein
Director, New York
jrubinstein@goulstonstorrs.com+1 212 878 5142
Jill S. Fox
Senior Attorney, New York
jfox@goulstonstorrs.com+1 212 878 5149On July 22, 2025, PitchBook published the latest Midyear Outlook: US Leveraged Loan and Private Credit report offering insights into key trends shaping the leveraged loan and private credit markets during the first half of 2025. Below is a summary of the main themes and market dynamics that borrowers and lenders should keep in mind as they navigate dealmaking, refinancings, and capital allocation decisions in the second half of 2025 and beyond.
Leveraged Loans
After a slow April, the leveraged loan market regained momentum in May and June, with July activity matching January levels. Approximately 50 deals worth about $80 billion are in the market. CLO issuance also rose slightly to $51 billion across 109 deals. Year-to-date loan issuance hit $113 billion by mid-July, outpacing 2024’s full-year total.
There has been largely muted M&A activity, although the loan market expanded by $83 billion in Q2— the fastest growth since April 2022. This expansion stems less from acquisition financing and more from reduced repayment activity and the entry of large borrowers into the syndicated market. For the first time, several multi-billion-dollar issuers are tapping the broadly syndicated loan market.
Opportunistic issuance and refinancings are sharply down; sponsor-backed refinancing volume dropped nearly 50% year-over-year.
Dividend recapitalizations remain robust, tracking closely to last year’s elevated pace as sponsors face constrained exit options.
Private Credit
Fundraising remains strong, but deal supply has not kept pace, contributing to execution challenges.
Despite overall disappointment, there has been an increase in deals financed by private loans. Several major financings underscored private credit’s capacity to execute large deals: 20 transactions over $1 billion so far this year, including a $5.5 billion facility for Dun & Bradstreet.
Active sectors include technology, healthcare, and infrastructure. Infrastructure investment - particularly to support AI - has emerged as a strategic focus, exemplified by Apollo’s reported talks to finance Meta’s $35 billion data center build-out.
The delayed draw term loan is especially appealing to lenders and borrowers pursuing build-and-buy strategies. Syndicated lenders are now racing to replicate this flexibility.
Emerging Risks: Tariffs and Defaults
Recent Chapter 11 filings have cited tariffs as a contributing factor. Uncertainty around tariff impact continues, especially for companies dependent on imports or export revenue.
Private lenders have taken on $17 billion in distressed debt over the past six months, raising concerns about default risk and market resilience.
Despite ongoing macro and regulatory uncertainty, the debt markets show signs of stabilization. Both private and syndicated lenders are adapting to a changing landscape, and activity levels are poised to remain strong heading into 2026.