Direct Lenders Expected to Push on Pricing for Kroll’s 2027 Debt Refi in Private Credit Market

As financial advisory firm Kroll, fka Duff & Phelps, seeks to refinance its $1.9 billion term loan due 2027 in the private credit market, direct lenders will likely demand wider pricing to compensate for extra risk around the credit, several sources told Octus.

The company is looking to secure financing from private lenders in the range of SOFR+450 bps-475 bps, according to a source familiar with Kroll’s deal. The advisory firm also has an outstanding $450 million second lien term loan, the source said.

Three sources said private credit pricing below SOFR+500 bps right now is considered premium and reserved for top-tier credits that are performing well and sought after by lenders. Companies that have not shown a track record of performance, on the other hand, would likely see pricing topping out at about SOFR+525 bps.

“It’s not uncommon to get this kind of delta between the bid and the ask in early stages,” said one source. “A credit that hasn’t performed, that has a story to the credit, lenders need a premium.”

Kroll is a well-known name that is owned by prominent sponsors, such as Stone Point Capital and Permira Private Equity, which is a boon for the deal, said sources. However, in June the company faced scrutiny from credit ratings agency Moody’s Ratings when it revised its outlook on Kroll from stable to negative while affirming its B3 corporate rating.

According to the Moody’s report, the adjusted outlook reflected concerns around Kroll’s ability to secure term loan maturity extensions without reducing financial leverage.

“About $150 million of equity funded in late 2023 and early 2024 enabled Kroll to maintain investments in business expansion and cost management initiatives, and indicate ownership support, but we expect financial leverage will remain very high, interest coverage will stay quite weak and liquidity could remain strained unless earnings grow more rapidly than we anticipate, and debt is reduced,” Moody’s Senior Vice President Edmond DeForest said in the report.

Typically, top-tier private lenders would shy away from such risk, but the solid reputation of Kroll’s sponsors could attract interest, said sources. A nearly $2 billion refinancing package would require at least one large anchor lender to get the deal done, sources agreed, pointing to Ares, KKR, Blackstone and HPS as examples.

Over the past 12 months, Morgan Stanley Private Credit has been a key lender on unitranche financings associated with at least two Stone Point Capital deals, according to Octus’ Private Credit & Deal Origination Database.

To attract an anchor lender, however, pricing will be the deciding factor, said sources, noting that wider pricing compensates lenders for riskier credits.

Another sweetener to pull large lenders to the table would be if Kroll were to raise additional equity from its sponsors. “Private credit loves the alignment when sponsors show they still believe in the business,” said a lender counsel. “That’s usually a strong factor in getting a deal done.”

From the borrower’s perspective, to try to secure the best pricing possible, Kroll could consider postponing its refinancing effort until 2026 in hopes of delivering improved financials in its year-end earnings report.

If Kroll could improve its financial profile by year-end, the move could pave the way for more optionality, such as securing an amend-and-extend with existing lenders while paying a consent fee. “That may be the path of least resistance,” said one lender counsel.

However, today’s lending markets are hot, thanks to an abundance of capital and a shortage of deals. As a result, even risker paper is likely to see demand from lenders, according to one direct lender. The industry has seen a surge of new and emerging managers, for example, and backing riskier credits owned by a solid sponsor group could be seen as an opportunity to raise their profile amid a field of rapidly expanding competition.

Kroll’s existing first lien loan due 2027, which is priced at SOFR+375 bps, was trading at 99/99.5 as of today, according to Solve, while its second lien loan due 2028, priced at SOFR+675 bps, was trading at 99/100.

In 2020, Kroll was acquired by Stone Point Capital and Further Global Capital Management for $4.2 billion. Seller Permira Private Equity – which first acquired the company in 2017 for $1.75 billion – has also retained a significant stake in the business, as did the management team, according to a press release.

Kroll provides financial and risk advisory services for companies, including advising on matters around valuations, real estate, fixed income solutions, M&A transactions, tax structuring and private capital.

Peers in the space include AlixPartners, Ernst & Young (EY-Parthenon) and FTI Consulting – the latter of which reported a 3.3% decrease in first-quarter 2025 revenue due to headwinds in its economic consulting and corporate finance and restructuring divisions.

Meanwhile, financial advisory firm Baker Tilly this year announced its merger with Moss Adams to create the sixth-largest advisory CPA firm in the United States. In June, Octus reported that the deal is being supported by a $1.45 billion debt financing package led by Blackstone with participants such as Blue Owl Capital and New Mountain Capital.

A list of Kroll’s CLO holders can be found in Octus’ CLO Database HERE.

Kroll, Stone Point Capital, Further Global and Permira did not respond to requests for comment.

Disclosure: Funds associated with Permira hold a majority interest in the parent company of Octus.