Don’t miss out on news you won’t find anywhere else — get The Memo US and The Memo Europe in your inbox every two weeks.

TLDR

• A constructive 2026 backdrop is expected as the rate-cutting cycle continues, fueling a rise in high yield and leveraged loan gross supply
• While repricings and refinancings will likely dominate the first half of 2026, a major transition is expected toward new M&A and LBO deals, especially among middle-market, sponsor-backed activities
• Massive debt financing for AI will shift from a pure IG play to a broad market influence. While adoption could improve corporate margins, AI disruption poses a significant risk to tech and business service sectors
• The competition between broadly syndicated and private credit markets, which will only intensify in 2026, has created a more more borrower-friendly environment

It’s never easy

Never say never. If we learned anything from 2025, it’s that you probably should not make predictions: what was expected to be a lofty year for issuance met Liberation Day and came to a brief standstill. But the market then surprised all of us with its resilience, as activity has picked up significantly since Q3, adding a few major deals to next year’s pipeline.

Who knows what unexpected shocks 2026 will bring. In any case, we’ve been asking around and are hearing a healthy dose of optimism from different sides of the market. But despite moderating inflation and improved earnings quality, several negative factors point to a bifurcated, K-shaped credit market that’s echoing similar pressures among consumers.