Americas Private Credit Review – April 2025, 2025: Middle-Market Lenders Shift to Refi and Liquidity Solutions to Help Borrowers Navigate Market Uncertainty

Editor’s Note: Welcome to Octus’ Americas Private Credit Review. This regular report encapsulates market information, data and commentary relevant to private debt investors and professionals in the United States. We include a curation of Octus’, formerly Reorg’s, enterprise journalism, with links to unverified third-party press reports and primary sources. Finally, the review includes a link to a deal tracker for private credit and M&A transactions.

By Yuheng Zhan, Paola Aurisicchio

Trump’s tariff shake-up has reignited market uncertainty, causing middle-market lenders to increase their scrutiny on credits and focus on opportunities less reliant on M&A deals.

Refinancing and maturity extensions are taking center stage in the middle market as companies look to manage debt burdens and brace for more tariff turbulence. At the same time, carve-outs are picking up steam as a major liquidity booster, while asset-based lending is also gaining momentum as another go-to option.

While there has been some pushback on deals because of the tariff turmoil, lenders are narrowing their focus to specific sectors or companies with a strong appetite for A-tier assets, according to James Bardenwerper, director at investment bank Configure Partners. “Deals get done, but we are seeing a greater focus on certain elements of the business that we haven’t talked about in a few years,” said Bardenwerper.

In these circumstances, more selective credit investors are reassessing how to deploy their dry powder as the current environment is set to curb traditional M&A activity. “Over the next six to nine months, I expect to be very busy with refinancing activity and providing liquidity solutions,” said Bardenwerper. Additionally, he noted that structured capital, which sits between senior debt and equity-preferred structures, will be in a significant portion of deals this year.

To counter the rising pressure on asset valuations, private lenders are toughening up, demanding higher returns that push spreads wider. This echoed what happened during the Covid-19 pandemic, when broadly syndicated loan markets first saw spreads widen, followed by the private credit market, said Michael Guarnieri, managing partner of Evolution Credit Partners.

“If you look at the syndicated loan market, better-quality credits are about 25 to 50 bps wider, and lower-quality credits are about 100 to 125 bps wider,” Guarnieri said. In the private credit market, borrowers are dependent on imported components, such as consumer product retailers, automotive suppliers and industrial manufacturers, which are seeing a 25-to-50 bps increase, Octus reported.

However, top-tier borrowers can still somehow weather the tariff turmoil’s impact on pricing. For example, Thoma Bravo’s acquisition of Boeing’s Jeppesen secured over $4 billion in financing from private lenders at around SOFR+475 bps. Blackstone and Blue Owl also provided more than $600 million with SOFR+450 bps-500 bps to support BayPine’s $1.5 billion acquisition of CenExel.

For non-M&A deals, middle-market participants said transitional financing backed by real assets offers borrowers a way to boost liquidity while the capital markets stay open.

Larry Klaff and Garrett Stephen, the head of asset-based loans and co-head of origination at First Eagle Investments, respectively, say that borrowers with margins and EBITDA that are sensitive to rising import costs will find an asset-based structure that better fits their needs, as ABL structures are often more affordable than traditional cash flow loans.

“Many borrowers are considering exploring opportunities to generate additional liquidity through unencumbered assets on their balance sheet,” Klaff said, noting examples such as accounts receivable, inventory, machinery and equipment, real estate, and intellectual property.

By doing so, an asset-based lender can negotiate a structure that offers a higher advance rate on assets or be able to include noncore assets in the borrowing base, giving the borrower access to more liquidity than traditional channels would allow, he said.

Octus’ U.S. private credit deal tracker can be found HERE. The deal tracker aggregates 868 deals announced in 2024 and 2025.