It’s been a sweet start to the year for the syndicated leveraged finance markets. Lower margins have enticed companies and sponsors back from private credit, leading to new money in the market and underscoring the strength of a broad distribution.

There’s optimism in the wider capital markets, mostly driven by red-hot stock markets. Nvidia’s AI-fueled earnings led to the biggest single session gain in value of all time. Coming alongside lower than expected jobless gains and larger than expected continuing claims in the US, the S&P 500, Nasdaq 100 and Dow Jones indices hit new all-time highs, with similar strong gains in European equities — setting a strong tone for deals to get done.

Meanwhile hopes for 2024 rate cuts are feeling increasingly unlikely – Deutsche Bank research pointed out that Fed funds futures saw expectations of a 2024 rate cut drop to a three month low, and expectations of a ECB rate cut by June fell as well.

Despite the stock market excitement, primary loans started to see some investors coming down from the sugar high.