A wave of corporate debt issued during the low-yield environment of 2020 and 2021 is approaching maturity. Middle-market firms are facing significantly higher coupon rates upon refinancing, forcing executive boards to prioritize balance sheet de-leveraging over capital expenditures and strategic acquisitions.
Shift Toward Private Credit Solutions
As traditional commercial banks tighten lending criteria to satisfy heightened regulatory capital requirements, institutional borrowers are turning to direct lending funds. While private credit offers execution certainty, higher base rates continue to exert downward pressure on net operating margins.