Leveraged debt markets navigated a turbulent 2025, marked by a global tariff surge. But they’re finishing the year on a strong note — underscoring the resilience of US capital markets.

Through these ups and downs, Goldman Sachs has been on the frontlines of the syndicated loan and high yield markets, giving the investment bank a prime view on how this year has shaped up.

That’s why 9fin recently sat down with Chris Bonner, Goldman’s head of leveraged finance in the Americas, to discuss his views on the state of the market and what he sees in his crystal ball for 2026.

In the interview, Bonner said the LevFin landscape is set for a major refresh in 2026, driven by a much-anticipated uptick in M&A. He was particularly optimistic about a resurgence in sponsor-backed deals and shared his thoughts on the growing number of AI-driven data center financings.

1. What does the general landscape for leveraged finance look at the moment?

These are a lot more fun when you have a market that looks like it does right now as we head into what’s expected to be a busy 2026. At the heart of it, this is really a question of what M&A or net new supply will look like next year. As we end 2025, we are starting to see roots of what will feel like a much different year from a technical point of view. 2024 and almost all of 2025 have been massively dominated by refinancings. Volumes continue to be elevated, but there’s not a lot of new capital in the market.

As we are already starting to see the turn of the M&A machine, we are optimistic that 2026 could be a turning point for LevFin M&A. As always, the shift has been led by investment grade M&A in the first half of the year, and sponsor M&A or non-investment grade M&A showing up in the second half. This feels different than what we saw in 2022 and 2023. As Goldman operates a leading M&A franchise, we are seeing and hearing from clients that the wheels are in motion. We expect that by the end of this year, the general market will begin to sense the growing pipeline for 2026.

2. What does the balance of supply and demand look like?

I always feel like I'm oversimplifying things by talking about supply and demand being the biggest driver, but it is the biggest driver. For most of 2025, we've had this technical of supply being short and demand being long. Globally, the underwritten calendar has been hovering somewhere between $25 and $30 billion for most of the year. In my mind, the average is usually $75 to $85 billion at any point so we are certainly lagging averages, but that number is probably closer to that average number today on the back of the few large deals announced over the past few months. From an absolute point of view, that is consistent with years past and not a number that gives me pause. But if you zoom out a bit and look where it was three or six months ago, it's two to three times that previous number which I think accounts will start to take notice of.

3. What is the outlook specifically for sponsor-to-sponsor LBOs? That's a sweet spot for Goldman, and we haven't had much of that in recent years given where valuations and rates are.

The overall M&A numbers will actually look relatively elevated for 2025 when you include all corners of the market – IG and non-IG.  We're probably up 30% versus where we were last year and probably up another 50% or so versus where it was the year before. Not back to where we were in 2021 but still growing. That's a huge number but doesn't impact the leveraged finance market one-for-one. A lot of that's investment grade, a lot of that's large cap, a lot of that's stock-for-stock. We're not seeing as much come through the debt markets.

You asked the question that everybody wants to know the answer to, which is all these sponsors have these massive funds, the financing market's been open and constructive and the bank ecosystem is very healthy.

4. So why aren't sponsors either capitulating and taking a little bit less value, or why aren't they paying a little bit more if they're the buyer?

One, you've got an equity market that's come back, so there's another way to exit your investments. Two, there's different ways to monetize investments. You've had continuation vehicles, you've had minority sales, you've had different ways that are not the traditional buy a business, fix a business, sell a business to exit. To some extent you've also had an LP base that probably has been on the margin a bit more patient than you otherwise think they would be as well. If you look at our backlog right now, there's a decent amount of sponsor-to-sponsor trades and staple financings that we're looking at right now so as I said, it’s the beginning of what we expect to be a real thaw.

5. Could you give any color on the flavor of those financings?

The deals that we've been looking at for most of 2025, there's been a fair amount of corporate carve-outs. You had a decent amount of public-to-private. So you saw EA was a big one. And you saw Sealed Air that got announced — so two sizable ones that contribute to the calendar for next year. Which, again, when you're looking at public stock markets right now, it’s surprising that at all-time highs, you're still seeing sponsors choose to wade into that market. I think the reality is that's back to their old knitting. And then the third part we've seen has been this buy and build or roll up model.

The insurance brokers are a great example of that trade five years ago. For sectors — there's a pickup in healthcare M&A, and TMT in general where a lot of the AI investments reside. And then industrials, which honestly is one of our bigger sectors, has been slower on the sponsor front this year. We're starting to see that market pick up again.

6. There's all these high yield data center deals, getting a lot of attraction. How much room do you think that trend has to play out given these big numbers the tech companies are touting? How realistic do you think these numbers are?

We’ve seen a staggering number already, and I think we're just in the first couple of innings of it. Everyone is going to participate – CMBS, structured finance, LevFin, IG. This is a trend that is going to be thematic in 2026 for all of the various markets. We sometimes think about data centers as just the four walls and some computers inside, right? But when you actually start building, the ecosystem is so much larger. There is the power company, which is very different than the four walls, which is very different than the chips, which is very different than the cooling. The total addressable market is massive.

When we go to an AI or a data center pitch — and these are general terms because there's a lot of pieces to it — you’ll have your CMBS team, your structured finance team, your private credit team, your investment-grade bond team, your hyperscaler experts, and investment-grade private credit. Everyone is a part of this. The Capital Solutions Group we formed in 2025 is where all of these products reside so again, I think we are uniquely positioned in that all of our team is one cohesive group with product specialization on an individual level.

7. We probably are over-reductive when we talk about the competition between BSL and private credit. But what kind of tactics and strategies have you seen employed by the banks and private credit lenders as a way to ensure they win out the next deal?

We are somewhat unique in that we are the one firm with a market-leading private credit fund that has raised dedicated funds so we're truly agnostic. If there's a compelling reason to do a broadly syndicated deal, we can offer that in the investment bank. If it makes more sense to do a private credit deal, we'll have our asset management division do the private credit deal.

We're happy to deliver a menu to a buyer and say, ‘You pick. We don't care.’ A huge amount of the growth in our private credit business has been that attitude of ‘choose your own adventure’ for sponsors. It's a little different than some of our competitors that are either coming up with partnerships or trying to figure out balance sheet solutions. Ours is a more established and organic solution than probably others have.

In terms of the tension between the two markets today, I would say the private credit market has had to be a little bit more creative just because their spread profile is wider today versus a very well-functioning BSL market. But I don't ascribe to this whole idea that one market's going to win and one market's going to lose. It is healthy competition and both markets are going to have very long durations.

8. Do you think there's room within BSL land for another repricing wave? Every time the soft call comes in, we see one. And for the CLO holders, they roll their eyes and ask are we doing this again? What do you think about that?

The answer to this question I think is really a question of does M&A match what we expect it to in 2026 and is net new supply a thing.  If so, of course we will have repricings but not at the velocity we did in 2025 and 2024 before that. We have names that have repriced three times in two years which on paper seems impossible but here we are. I would say that base rates declining may be another reason we see less repricings, as all-in coupons decrease and just become less attractive, but I think that is a distant second to the question of supply.

9. What’s the last sporting event you attended and who were you rooting for?

Mets game with some clients, who happened to be real die-hard fans. Perfect night and the Mets won by a lot. Always a fun way to spend a night and nothing wrong with the clients being happy their Mets won!

9Questions is our Q&A series featuring key decision-makers in the corporate credit markets — get in touch if you know who we should be talking to!