BDO Capital Q2 2023 Debt Market Update

U.S. institutional leveraged lending issuances exhibited a slight decrease from $52B in Q1 to $48B in Q2.¹ Lenders have signaled continued conservatism, driven by preexisting fears around federal fund rates policy, recession rumors, as well as lingering concerns regarding bank failure and the potential for a deposit run. The decline in lending activity has been accompanied by a reduction in U.S. M&A announced transactions deal value, down 44% in Q1 2023 year-over-year.² Private equity backed deals disproportionately drove declines in deal volume as a tighter lending environment created barriers to LBO financings and made it difficult for financial sponsors to meet their preferred hurdle rates.

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¹ PitchBook
² Refinitiv