2025: Cruising Through Chaos.
Looking back at 2025, we believe the defining theme was the sheer durability of investor demand. Despite a year filled with market moving events, the appetite for deployment opportunities remained remarkably resilient. Fierce competition for quality credits and deployment in general sustained a favorable environment for borrowers and set the stage for a meaningful year-end recovery in M&A activity.
Q4 & FY 2025 Private Credit Snapshot.
A Late Comeback. After a subdued start to 2025, private credit deal volume accelerated in the second half, culminating in one of the busiest year-end finishes on record. Total new issuance was $327 billion in 2025, surpassing the prior record of $302 billion in 2024.1 December issuance exceeded $42 billion, the highest monthly reading on record, which propelled Q4 volume to $105 billion, a new quarterly high.1
LBO Rekindling. LBO activity started to thaw as macro uncertainty eased throughout the year. Buyout volume rose to $71 billion in the second half, representing a 65% increase compared to the first half of the year.1 December set a new monthly record with $19 billion of LBO issuance, while Q4 established a new quarterly peak of $38 billion.1 On a full-year basis, buyouts reached $113 billion, a 30% increase from 2024 and the highest annual total on record.1
Digging deeper into the increase, average LBO transaction size increased 8% year-over-year with deal count growing 20% year-over-year.1 Jumbo LBO loans (greater than $1 billion in size) accounted for roughly one-third of total LBO dollar volume in 2025, which represents an increase from the 25% share in 2024.1 Excluding these jumbo loans, LBO activity grew approximately 20% year-over-year.1
Add-on M&A and Dividend Recap Gains. Add-on M&A transactions and dividend recapitalizations also had standout years. M&A issuance rose 21% year-over-year as sponsors leaned into strategic combinations and bolt-on M&A for existing portfolio companies.1 Meanwhile, dividend recapitalizations more than doubled compared to 2024.1 As we have discussed in prior Market Minutes, sponsors have increasingly turned to recaps to return capital to their LPs as traditional exit pathways have been more challenging.
New Market Clearing Levels. Spreads compressed modestly during the quarter with the average spread on private LBO transactions ending December at S+4.85%.1 Despite this compression, direct lenders still benefitted from a spread premium of over 160-basis-points compared to the broadly syndicated loan (“BSL”) market.1 In addition, inclusive of base rates, all-in coupons remain elevated relative to 2021 levels; average private unitranche all-in coupons ended the year at approximately 9.00%, a 250-basis-points increase from four years ago.1
Amid these hot market conditions, we have observed a loosening of underwriting standards across the credit landscape. Nevertheless, we believe private credit continues to maintain a structural advantage, as we continue to observe more lender-protective terms being included in private deal documentation than in the BSL market. In our view, this evolution reflects peak market demand and reinforces the importance of disciplined credit selection and thorough underwriting.
2025 BSL Market in Review.
The BSL market was similarly active, posting new issue loan volume of $439 billion.2 This nearly doubled the annual average experienced in the anemic 2022-2023 period but trailed 2024’s refinancing-driven surge by 13%.2 LBO and M&A activity grew 10% year-over-year, yet is still 20% behind the 10-year annual average.2 Outside of LBO and M&A transactions, BSL lenders continued to lean in to dividend recapitalizations, which reached $80 billion, the third highest year on record, behind only 2021 and 2024.
We are often asked about the competition between the BSL and private credit markets. Our view is that there is ample room for both markets to grow in tandem. Borrowers and sponsors value the optionality and unique benefits of each.
2026: Positioned for a Busy Year Ahead.
Inflection Point. We continue to expect a pickup in LBO and M&A activity in 2026, driven by a convergence of supportive tailwinds. Lower base rates and tightening spreads are driving down all-in yields, offering borrowers more attractive financing terms than we have seen in recent years.1,2 At the same time, while a more active 2025 provided some relief, sponsors still face a backlog of aging assets.3 This continues to drive a strategic need to realize exits, return capital to LPs, and rotate into new opportunities with the remaining dry powder.3 We believe these dynamics are also bolstered by robust market technicals. Broad-based demand for new paper has continued, as investors continue to prioritize deployment over market noise or uncertainty.
Consistent Brinley Approach: Precision Over Pace.
As we enter 2026, we believe Brinley is well positioned to capitalize on the turning tide. We have already seen deal activity accelerate in January. Furthermore, we continue to hear from our sponsor partners about an uptick in early LBO and M&A processes, which serves as a promising sign for sustained momentum as the year progresses. Against this backdrop, we see significant opportunities to deploy capital prudently while maintaining the rigorous underwriting standards that define our approach.
We look forward to building on this momentum in the year ahead.
Warm regards,
The Brinley Partners Team
The information and opinions contained herein are for background purposes only, are subject to change without notice, do not purport to be full or complete and do not constitute an offer to sell, or a solicitation of any offer to buy, any securities or investment services. Brinley Partners, LP (“Brinley”) has no obligation to update any information contained herein for any reason, including to reflect any change in its research conclusions, investment methodology, strategy or perspective. Unless otherwise indicated, the information contained herein is current as of the date indicated. The information contained herein is believed to be reliable and has been obtained from sources believed to be reliable, but no representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this presentation by Brinley, its affiliates or any of their respective members, partners, directors, officers, employees and agents and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. In particular, but without prejudice to the generality of the foregoing, (i) no representation or warranty is given as to the achievement or reasonableness of any returns, projections, estimates, valuations or prospects contained in this document or in such other written or oral information and (ii) Brinley makes no guarantee as to the reliability of any third-party information source, and its opinions concerning the accuracy, relevance and implications of the historical information or future projections included herein are liable to change without notice.
This document contains “forward-looking statements” within the meaning of the federal securities laws. In this context, forward-looking statements often address expected future business and financial performance and financial conditions, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Recipients should note that these and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Past performance is not a guarantee of future results.
Opinions expressed herein reflect the current subjective views and opinions of Brinley as of the date hereof only and are subject to change. Such opinions and views may be based on a variety of factors, including, without limitation, market observations, the experience of Brinley and its team as investors in the relevant market and Brinley’s analysis or interpretation of objective market data or historical trends. Certain information contained herein discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed or relied upon as research or investment advice. There can be no assurances that any trends described herein will continue or will not reverse. Past events and trends do not imply, predict or guarantee, and are not necessarily indicative of, future events or results.
- Source: Source: KBRA DLD, as of 12/31/25. Note: Private market volume figures have been tracked since 2021. Private spread premium refers to the 3-month average difference between private large cap spreads and broadly syndicated Single-B spreads.
- Source: Pitchbook Q4 2025 Credit Markets Quarterly Wrap, as of 12/31/25.
- Source: Pitchbook 2025 Annual US PE Breakdown, as of 12/31/25.
Q4 2025 Brinley Market Minute
2025: Cruising Through Chaos.
Looking back at 2025, we believe the defining theme was the sheer durability of investor demand. Despite a year filled with market moving events, the appetite for deployment opportunities remained remarkably resilient. Fierce competition for quality credits and deployment in general sustained a favorable environment for borrowers and set the stage for a meaningful year-end recovery in M&A activity.
Q4 & FY 2025 Private Credit Snapshot.
A Late Comeback. After a subdued start to 2025, private credit deal volume accelerated in the second half, culminating in one of the busiest year-end finishes on record. Total new issuance was $327 billion in 2025, surpassing the prior record of $302 billion in 2024.1 December issuance exceeded $42 billion, the highest monthly reading on record, which propelled Q4 volume to $105 billion, a new quarterly high.1
LBO Rekindling. LBO activity started to thaw as macro uncertainty eased throughout the year. Buyout volume rose to $71 billion in the second half, representing a 65% increase compared to the first half of the year.1 December set a new monthly record with $19 billion of LBO issuance, while Q4 established a new quarterly peak of $38 billion.1 On a full-year basis, buyouts reached $113 billion, a 30% increase from 2024 and the highest annual total on record.1
Digging deeper into the increase, average LBO transaction size increased 8% year-over-year with deal count growing 20% year-over-year.1 Jumbo LBO loans (greater than $1 billion in size) accounted for roughly one-third of total LBO dollar volume in 2025, which represents an increase from the 25% share in 2024.1 Excluding these jumbo loans, LBO activity grew approximately 20% year-over-year.1
Add-on M&A and Dividend Recap Gains. Add-on M&A transactions and dividend recapitalizations also had standout years. M&A issuance rose 21% year-over-year as sponsors leaned into strategic combinations and bolt-on M&A for existing portfolio companies.1 Meanwhile, dividend recapitalizations more than doubled compared to 2024.1 As we have discussed in prior Market Minutes, sponsors have increasingly turned to recaps to return capital to their LPs as traditional exit pathways have been more challenging.
New Market Clearing Levels. Spreads compressed modestly during the quarter with the average spread on private LBO transactions ending December at S+4.85%.1 Despite this compression, direct lenders still benefitted from a spread premium of over 160-basis-points compared to the broadly syndicated loan (“BSL”) market.1 In addition, inclusive of base rates, all-in coupons remain elevated relative to 2021 levels; average private unitranche all-in coupons ended the year at approximately 9.00%, a 250-basis-points increase from four years ago.1
Amid these hot market conditions, we have observed a loosening of underwriting standards across the credit landscape. Nevertheless, we believe private credit continues to maintain a structural advantage, as we continue to observe more lender-protective terms being included in private deal documentation than in the BSL market. In our view, this evolution reflects peak market demand and reinforces the importance of disciplined credit selection and thorough underwriting.
2025 BSL Market in Review.
The BSL market was similarly active, posting new issue loan volume of $439 billion.2 This nearly doubled the annual average experienced in the anemic 2022-2023 period but trailed 2024’s refinancing-driven surge by 13%.2 LBO and M&A activity grew 10% year-over-year, yet is still 20% behind the 10-year annual average.2 Outside of LBO and M&A transactions, BSL lenders continued to lean in to dividend recapitalizations, which reached $80 billion, the third highest year on record, behind only 2021 and 2024.
We are often asked about the competition between the BSL and private credit markets. Our view is that there is ample room for both markets to grow in tandem. Borrowers and sponsors value the optionality and unique benefits of each.
2026: Positioned for a Busy Year Ahead.
Inflection Point. We continue to expect a pickup in LBO and M&A activity in 2026, driven by a convergence of supportive tailwinds. Lower base rates and tightening spreads are driving down all-in yields, offering borrowers more attractive financing terms than we have seen in recent years.1,2 At the same time, while a more active 2025 provided some relief, sponsors still face a backlog of aging assets.3 This continues to drive a strategic need to realize exits, return capital to LPs, and rotate into new opportunities with the remaining dry powder.3 We believe these dynamics are also bolstered by robust market technicals. Broad-based demand for new paper has continued, as investors continue to prioritize deployment over market noise or uncertainty.
Consistent Brinley Approach: Precision Over Pace.
As we enter 2026, we believe Brinley is well positioned to capitalize on the turning tide. We have already seen deal activity accelerate in January. Furthermore, we continue to hear from our sponsor partners about an uptick in early LBO and M&A processes, which serves as a promising sign for sustained momentum as the year progresses. Against this backdrop, we see significant opportunities to deploy capital prudently while maintaining the rigorous underwriting standards that define our approach.
We look forward to building on this momentum in the year ahead.
Warm regards,
The Brinley Partners Team
The information and opinions contained herein are for background purposes only, are subject to change without notice, do not purport to be full or complete and do not constitute an offer to sell, or a solicitation of any offer to buy, any securities or investment services. Brinley Partners, LP (“Brinley”) has no obligation to update any information contained herein for any reason, including to reflect any change in its research conclusions, investment methodology, strategy or perspective. Unless otherwise indicated, the information contained herein is current as of the date indicated. The information contained herein is believed to be reliable and has been obtained from sources believed to be reliable, but no representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this presentation by Brinley, its affiliates or any of their respective members, partners, directors, officers, employees and agents and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. In particular, but without prejudice to the generality of the foregoing, (i) no representation or warranty is given as to the achievement or reasonableness of any returns, projections, estimates, valuations or prospects contained in this document or in such other written or oral information and (ii) Brinley makes no guarantee as to the reliability of any third-party information source, and its opinions concerning the accuracy, relevance and implications of the historical information or future projections included herein are liable to change without notice.
This document contains “forward-looking statements” within the meaning of the federal securities laws. In this context, forward-looking statements often address expected future business and financial performance and financial conditions, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Recipients should note that these and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Past performance is not a guarantee of future results.
Opinions expressed herein reflect the current subjective views and opinions of Brinley as of the date hereof only and are subject to change. Such opinions and views may be based on a variety of factors, including, without limitation, market observations, the experience of Brinley and its team as investors in the relevant market and Brinley’s analysis or interpretation of objective market data or historical trends. Certain information contained herein discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed or relied upon as research or investment advice. There can be no assurances that any trends described herein will continue or will not reverse. Past events and trends do not imply, predict or guarantee, and are not necessarily indicative of, future events or results.
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