Despite the waves of economic uncertainty, the private credit market is experiencing a period of cautious optimism.

After a slower-than-anticipated Q1 in 2025, deal flow is expected to pick up in the latter half of the year as market participants get a better understanding of macroeconomic conditions, particularly regarding tariffs. Business development companies (BDCs) are likely to play a crucial role in helping us understand what happens next.

In our webinar, Q1 in the rear view, what’s next for BDCs, the 9fin team was joined by Jonathan Bock, Co-CEO of Blackstone secured lending, and Tom Hennigan, CFO of Carlyle secured lending. They discussed Q1 performance, the Q2 outlook, ongoing market challenges, and the potential for a recession.

Here are our top three takeaways from this webinar.

1. Strategic positioning is key for success in remaining 2025

The private credit market experienced slower deal flow in Q1 2025. The second quarter is proving no different.

Carlyle’s Hennigan described it as an "air pocket" in April originations, which is expected to continue its impact right through to Q3 deal closings.

Increased certainty around economic conditions, especially tariffs, could tip the scales in favour of deal activity, and cause a resurgence in Q4. But for private credit professionals to stay on top of this potential uptick, strategic positioning is imperative.

It’s also important to make sure you consider transaction timing, and how it’s influenced by broader economic clarity.

Check out this case study on how this credit specialist firm uses 9fin to uncover the private credit market and gain a competitive advantage.

2. Private credit’s golden moment continues to shine

In an already opaque market, it’s easy to imagine that volatility and uncertainty would make investment opportunities even more challenging to unearth.

But lenders and debt advisors can be assured – surprisingly, private credit has shown continued resilience and still offers attractive investment opportunities, in areas such as software, recurring revenue, and high-margin businesses.

Blackstone’s Bock mentioned the increasing entry of larger, more sophisticated borrowers into the private credit market, signaling growing optimism and validating the market’s ability to accommodate financing needs.

When it comes to periods of uncertainty, private credit maintains a competitive edge over other syndicated markets, offering more stability and agility

According to Bock, there are signs for significant optimism:

“Over time, those that use and consume this private credit product from a borrower perspective are different to what we would have seen even two years ago,” he said. “The general uplift in private credit is where we’re seeing obligors at the larger end of the spectrum. That’s very attractive – there are only a few who can equip those types of transactions.”

Hennigan added to this optimism: “In early April there was no syndicated market, and that's where you'll continue to see opportunities for the private credit players.”

3. Understanding nuances and mitigating risks – a must for the underwriting process

For BDC lenders and debt advisors, there are several considerations when underwriting. They need to:

1. Proactively address complex risks like supply chain vulnerabilities and tariff impacts. This is necessary when securing high-quality, senior secured deals, and will mitigate potential EBITDA declines in portfolio companies
2. Be on the lookout for new opportunities that arise from regulatory changes. Evolving SEC regulations, such as potential changes to ease BDC investment, could lead to increased investor access and more streamlined BDC operations. Ultimately, this means more opportunities for growth, and broader market participation
3. Be aware of liquidity mismatches in liquid structures, despite the positive regulatory shifts, such as with daily liquid funds incorporating private credit – and take the necessary steps to address this
4. Understand the nuances of the market. A deep understanding of risk management strategies and the evolving regulatory landscape is crucial for lenders and advisors who want to navigate the BDC market effectively

9fin’s BDC holdings data can help Private Credit users access comprehensive investment holdings data – giving you a snapshot into the broader investment landscape, so you can make more informed decisions, faster.

Cautious optimism for an evolving market

The 9fin webinar, Q1 in the rear view, what’s next for BDCs, provided actionable and valuable intel into the evolving private credit market – and it was great to see cautious optimism amongst the current turbulence.

Grab the recording here for the full event.

As the BDC market continues to evolve, staying up-to-date on economic conditions, regulatory changes, and emerging opportunities is a no-brainer for market participants. Overall, the outlook remains strong, bolstered by a focus on sophisticated borrowers and stable, senior secured debt.

For those looking to dive deeper into the landscape, 9fin Private Credit offers a faster, smarter way to source and win new deals.

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