Migration to Private Credit Continues: Q3 Credit Markets

Q3 2025 Highlights

• Market volatility, driven by changes in tariff policy, labor market softness, and dovish monetary policy expectations, defined the quarter.
• Record dry powder availability chasing a limited deal pipeline has allowed borrowers unprecedented negotiating power, as reflected in a combination of narrowing spreads, higher leverage, and more flexible covenant structures.
• A cautious M&A market tempered demand for acquisition-related financing; conversely, private credit increasingly funded organic growth initiatives.
• Notably, private credit is also increasingly stepping in to refinance “fatigued” incumbent lenders.

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