The proportion of large- and mid-cap non-public debt offers dropped final 12 months in favour of smaller transactions, as lenders flock to the decrease finish of the marketplace for extra beneficial pricing.
Information compiled by Preqin, shared with Various Credit score Investor, confirmed that the share of mid-cap offers – these between $100m (£77.3m) and $500m – fell to 19 per cent final 12 months from 25 per cent in 2023.
Massive-cap offers – these of $500m and extra – fell from 41 per cent of the market in 2023 to 36 per cent in 2024.
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Conversely, small-cap offers – underneath $100m – rose from a 34 per cent share of the market in 2023 to 45 per cent in 2024.
Antonello Aquino, managing director for EMEA non-public credit score at Moody’s Rankings, mentioned that the shift of personal capital may be motivated by a number of market traits.
“LBO exercise has been depressed over the past two years,” he mentioned. “Consequently, extra direct lending exercise has taken the type of add-on transactions, which are typically smaller in dimension.
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“The prevalence of smaller offers can also be attributed to much less margin compression within the small-cap section in comparison with the remainder of the market.
“Direct lenders are much less aggressive on pricing on the upper-middle-market offers in comparison with the resurgent broadly syndicated mortgage market and by concentrating on of smaller, considerably riskier companies permits direct lenders to cost increased rates of interest.”
917 non-public debt offers have been recorded in 2024, with a median deal dimension of $1,113.1m. This in comparison with 878 offers in 2023, with a median deal dimension of $1,322.7m, in keeping with Preqin knowledge.
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Mixture deal worth fell from $146.8bn in 2023 to $104.6bn in 2024.
This 12 months, 132 offers have been recorded as of 6 March 2025, with a median deal dimension of $775.7m, totalling $1.6bn.