PitchBook News - A record-shattering credit year

The following is an excerpt from our recent US Credit Markets Quarterly Wrap.

Leveraged loan activity flourished in the fourth quarter amid a favorable fundamental backdrop and demand-rich technical conditions. However, focus shifted back to opportunistic deals, with very little net supply in sight.

While most market participants expect M&A volume to increase in 2025, 2024 wrapped up with the largest supply shortage on record, at roughly $192 billion.

This technical imbalance was a consistent theme in 2024, compressing clearing yields to multiyear lows and fueling a record volume of refinancings and repricings.

Key takeaways from our report:

  • With $1.4 trillion of overall activity in the new-issue market, 2024 cemented its place in the record books.

 

Click to access the full report, including a 2025 outlook.

  • Speculative-grade borrowers repriced and refinanced existing term loans at a record clip in 2024.

  • Despite three rate cuts (the last on Dec. 18, after the market had all but wrapped for the year) and a massive repricing wave, loans gained 9.4% just from coupon-clipping in 2024.

  • Q4 was the second-busiest quarter ever as focus shifted back to opportunistic deals.

  • Investor demand for loans surged to a three-year high in Q4 as net supply declined.

  • Technical imbalance pushed new-issue spreads for single B borrowers to post-GFC lows.

All told, primary market activity climbed to $400 billion in the fourth quarter—the second-highest amount on record, just 1% shy of the $405 billion peak in Q2 2024.

December's loan production put an exclamation point on Q4 volume stats as speculative-grade borrowers took advantage of highly accommodating credit conditions at a record clip before the market shut down for the year-end holidays.

Total activity reached $193 billion, a record for any full calendar month. It is also more than four times the overall historical monthly average ($46 billion).

Indeed, 2024 cemented its place in the record books. Total activity of $1.4 trillion was 60% ahead of the 2021 tally and 41% higher than the prior peak in 2017. However, these headline figures overstate the case.

Stripping out repricings that simply reduce spreads and maturity extension amendments, new-issue loan volume was $501 billion in 2024. While that's more than double the 2023 and 2022 levels, it lagged 2021 by 18% and fell just short of $503 billion in 2017.

In addition, issuance not related to a refinancing, which represents net supply for loan investors, totaled $242 billion in 2024, 45% below 2021 and roughly in line with the 10-year average.

For more data and analysis, get the free 34-page report: US Credit Markets Quarterly Wrap

Additional reports: US Leveraged Loan Index Monthly Wrap, European Credit Markets Quarterly Wrap.