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.

¹ PitchBook
² Refinitiv