What’s in a number?

We entered 2023 with the pendulum firmly on private credit lenders’ side. The invasion of Ukraine and the Fed kicking off its policy of hiking rates early last year flipped a script that had favored sponsors for years — suddenly, lenders were in charge as a new backdrop of macro-economic volatility overshadowed deal making.

However, as borrowers and lenders adjust to the new financial ecosystem, the scales have begun to steadily tip back in favor of sponsors.

At the beginning of the year, lenders told me they were holding firm on leverage, keeping documentation tight and spreads at a minimum of 600bps. Two recent deals show that the 600bps barrier has well and truly been breached.