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Wall Street banks take back $16bn worth of private credit deals

About $16bn of debt has transitioned from private funds into syndicated loan and bond markets so far in 2024 as borrowers increasingly opt for more affordable debt from Wall Street banks, according to a report by Bloomberg citing Bank of America data. 

According to the report, Thryv Holdings — a software-as-a-service company founded through a merger of yellow pages publishers Dex One and SuperMedia — has indicated its preference for traditional leveraged loans, despite another Bloomberg report earlier this month saying that the company had held discussions with private credit lenders regarding $350m in funding to refinance syndicated debt.

Companies switching to the public side can secure lower rates and shake off debt covenants that tend to be more restrictive than in syndicated arrangements, with many doing so long before private loans come due through call options that can be triggered after just one year.

The deals highlight how Wall Street banks are reclaiming high-yield, high-fee loans lost to the rapidly expanding $1.7tn private credit market in recent years, with leveraged loan prices near a 22-month high, allowing these banks to extend cheaper debt to companies than direct lenders can offer.

In response, private credit funds are improving terms and reducing pricing. Traditionally, private credit could charge about 6 to 7 percentage points above a base rate, but this has dropped significantly in recent months.

Earlier this year, Blackstone secured a $250m loan at a rate of around 4.75 percentage points over the US benchmark to finance its purchase of Rover Group — one of the cheapest rates on record for a private credit loan, according to Bloomberg’s data.

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