USA Law and Practice Contributed by: Stelios G Saffos, Dan Seale, Peter Sluka and Alfred Xue, Latham & Watkins LLP
Latham & Watkins LLP 1271 Avenue of the Americas New York, NY 10020 USA Tel: +1 212 906 1200
Email: pr@lw.com Web: www.lw.com
1. Private Credit Overview 1.1 Private Credit Market
1.2 Interaction With Public Markets Public debt markets have become increasingly com - petitive with the private credit market over the course of 2025 and 2024, marking a shift from 2023 when the vast majority of acquisition financings were provided by private credit lenders. With falling interest rates tightening credit spreads, the broadly syndicated market roared back over the last couple of years to recapture the market share that investment banks had ceded to private credit lenders, in particular through refinancings. Public debt markets will also benefit from deregula - tion and other changes relating to the leveraged lend - ing guidelines, and 2026 may well see participants in public debt markets competing aggressively with the private credit markets. Despite this competitive landscape, banks have increasingly been involved in a number of key partner - ships with private credit players, showing the undeni - able strength of the private credit market and signal - ling the evolving relationship between the public and private debt markets. 1.3 Acquisition Finance Private debt continued to play a major role in acquisi - tion financings in the United States in 2025 as private credit lenders stepped up with committed financings in the form of “jumbo” unitranche debt facilities to support some of the largest acquisition financings on tight timelines. To meet the demand for rising deal sizes, private equity sponsors have increasingly been building larger clubs of private debt lenders rather than relying on a single underwriter or small number of underwriters.
The private credit market had previously flourished in times of the broadly syndicated market dislocation but over the last two years, banks have been strongly returning to the syndicated market, resulting in stiffen - ing competition for private credit lenders. In the past 12 months, with fears of inflation easing globally, com - bined with the interest rate reduction cycle, M&A and IPO activity growth gained significant momentum, and given the repeated success of the private credit mar - ket in providing private equity sponsors with speed, innovative financing solutions and execution certainty, the private credit market was able to capitalise on this increased activity in 2025. With this exponential growth of private credit, tradi - tional sponsors and corporate borrowers have also looked to private credit to finance a wide range of asset classes, from real estate and infrastructure to technology and healthcare. In the real estate sector, for example, private credit is playing a crucial role in financing development projects and acquisitions, particularly in light of tightening bank lending stand - ards. In infrastructure, private credit is being used to fund large-scale projects, such as renewable energy developments, that require significant capital invest - ment. There is also a rise in private credit financing in the technology space, with its rapid pace of innova - tion and growth, where borrowers are tapping private credit keen to support companies with scalable busi - ness models and strong growth potential. Private credit has also been leading the development of financing structures for large-scale AI-related infra - structure. innovating to support the capital needs of evolving technologies.
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