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Private credit firms are offering longer revolver tenors as a competitive measure to win deals, according to 9fin sources.

Private credit-provided revolvers that match the tenor of the accompanying term loan have occasionally been seen over the past two years, but have recently appeared with increasing frequency, sources said. Offering longer maturities, of up to seven years, is a borrower-friendly tactic and is meant to increase the runway companies have before needing to extend maturities or refinance the credit facilities.

Lengthening revolver tenors is a creative option to fulfill a central tenant of private credit lending: ease of execution. It comes at a time where more capital raises are dual-tracked in the direct lending and broadly syndicated loan markets. In contrast, revolvers provided by banks are typically five years in length.

“It’s an interesting way to compete with BSL deals,” White & Case leveraged finance partner David Ridley said.

There has not been a shift in the legal ability of direct lenders to issue revolvers, but the frequency of matching tenors has increased in line with competition to deploy capital, sources added.

“In the past year or two it's been happening more frequently,” another lawyer said. “The market has spoken clearly on this that this is a natural need.”