LevFin Market in ‘Wait and See’ Mode Amid Iran War Volatility Following Rush of Deals Cleared From Pipeline

Deal activity in the primary high-yield bond and leveraged loan market has slowed to a near halt in recent weeks as continuing Iran war volatility rattles market participants’ confidence. With most of the leveraged finance forward pipeline now cleared to wrap up the first quarter of 2026, issuers and lenders are in a “wait and see mode” to assess how geopolitical dynamics play out.

Leveraged finance participants say the primary pipeline feels stagnant at the moment as issuers stand by until market conditions improve, with few sizable deals on the horizon in the next few weeks.

One leveraged finance banker said this week that there has been a lighter volume recently in the broadly syndicated loan market, but noted that conditions are still positive and that issuers still have access to capital.

Nonetheless, investors are struggling to confidently participate in an environment that is so unstable and fast moving, a high-yield bond investor said, between the high level of rate volatility and the changing geopolitical headlines each day.

Of the deals to launch in recent weeks, market volatility has also caused some to widen pricing or shift from loans to bonds in order to attract investors, including offerings for Sealed Air’s leveraged buyout and a refinancing deal for Mativ.

Despite Sealed Air being one of the larger and highly anticipated deals of this year’s pipeline, its $7.15 billion debt financing supporting its $10.3 billion take-private by Clayton, Dubilier & Rice struggled to cross the finish line last week because of significant buyside pushback. Investors raised numerous concerns regarding the bubble wrap maker’s high leverage, CD&R’s sponsor history and documentation allowing the company to sell assets without repaying debt. The multi-tranche leveraged loan and high-yield bond package underwent numerous pricing and documentation revisions after the loan failed to reach book size by the original commitment deadline.

A leveraged loan investor who passed on Sealed Air’s offering said they were surprised the deal got done, even with the wider pricing and increased lender provisions, which they said still do not entirely protect lenders from a potential spinoff. The $4.7 billion cross-border leveraged loan package was ultimately downsized to $4.2 billion, with wider pricing for the U.S. tranche at SOFR+400 bps and 95 OID. Both U.S. high-yield bond tranches were oversubscribed, with upsized secured bonds pricing at 8.5% and the unsecured bonds at 10.5%.

Investors who remain thoughtful and cautious on certain credits are being rewarded, another high-yield bond investor said, referencing the pushback on covenant and pricing terms investors achieved with Sealed Air.

Deal activity has slowed after the market priced roughly $25 billion in deals financing M&A and LBO activity in recent weeks, such as EA, Sealed Air and Janus Henderson, and now faces geopolitical risks, said a second leveraged finance banker this week regarding market conditions.

While those deals received stellar market feedback and are eventually expected to spur new activity, participants are still trying to digest the current market backdrop before bringing more deals. The banker noted that issuers are now looking for a good window to come to market while investors absorb the recent rush of financing opportunities.

A third leveraged finance banker said that while the markets still feel robust and open, lenders are exercising increased caution toward new issuance. Of the few deals in the market this week, global sports AI company Stats Perform is marketing its $475 million term loan B at a notably wide price talk of SOFR+700 bps and 96.5 OID.

Unless there is already a deal in process, many issuers in most sectors across the spectrum are just going to wait for now, the second banker added, who believes the energy sector is the sole sector expected to be safe from geopolitical risks and market volatility. Liquified natural gas provider Venture Global is one example of an energy name to successfully come to market in recent weeks, with pricing for its $1.75 billion term loan B tightening to SOFR+325 bps and 98.5 OID.

Another leveraged loan investor said the primary market feels settled with a quiet forward-looking pipeline after clearing EA and Sealed Air, although it remains unclear when deal volume will pick up, specifically for the software sector.

Last month, software provider Qualtrics halted premarketing discussions for its $5.3 billion debt package backing its acquisition of Press Ganey because of investor fears around AI disrupting the software sector. Investors previously considering the offering said a potential deal in the near future would need to come with significantly wide pricing, given where the company’s current debt has traded since February.

Market participants noted that they would be quite surprised if Qualtrics decided to come to market anytime soon given volatility beyond the scares in the software industry.