Credit Markets Report - Q4 2025

Q4 2025 Credit Markets Trends

This quarter, we examine a market shaped by volatility and policy shifts, as investors digest three consecutive Fed rate cuts amid a softer labor market and concerns around slowing growth. Equity markets experienced increased turbulence, particularly in the AI and semiconductor sectors.

Against this backdrop, private credit continues to serve borrowers as the leverage provider of choice, with companies leaning on direct lenders for recapitalization, growth capital and flexible refinancing solutions. Meanwhile, lenders race to deploy record levels of dry powder on higher credit quality offerings.

Key Takeaways

• In Q4, lenders largely favored issuers with scale and sponsor backing, while being more selective on those with operational or liquidity challenges.
• New-issue supply remained constrained, contributing to the issuer-friendly market environment.
• Lender focus areas included business services, healthcare services, consumer staples, industrials, and tech-enabled services.

Learn More

Contact Michael Brill, Managing Director and Head of Private Capital Markets at Dinan Capital Advisors, for more report insights.