USA Trends and Developments Contributed by: Yana M. Mereminsky, Ramya S. Tiller, Erik J. Andrén and Vadim Avdeychik, Debevoise & Plimpton LLP
investors chose to patiently remain on the sidelines, waiting for trade agreements to be finalised and for the market to digest the related implications, before making new debt investments. Second, while the Federal Reserve signalled at the end of 2024 that at least two additional rate cuts were expected in 2025, these rate cuts have not yet materialised. The Fed has maintained rates and taken a more cautious approach towards additional cuts, given the possibility of infla - tion rising again as the impact of tariffs makes its way through the economy. Third, the increase in M&A- driven debt issuance that was expected in 2025 has been slow to materialise. For example, according to PitchBook LCD, private equity sponsors issued only USD38.2 billion of loans in the first half of 2025 to finance new M&A transactions; while this was higher than the first half of 2024 (which was a year charac - terised by opportunistic financing transactions, such as refinancing, repricing and dividend recap transac - tions not tied to M&A activity), it is less than the ten- year average of USD43 billion for this period. Notably, sponsors have cited the macro-economic uncertainty and higher interest rates as constraining the number of active M&A processes so far in 2025. Looking to the second half of 2025, there remains pos - itive sentiment that debt market activity will rebound with a strong second half. While few trade agreements have been finalised to date (on publication of this guide, 11 September 2025) between the United States and other governments, tariffs should have a reduced impact on both debt issuance and M&A activity. In particular, the administration’s decision to postpone the implementation of most proposed tariffs, together with news reports that trade discussions will lead to new trade agreements, may lead debt investors to view tariff risk as less of a threat going forward. In addition, the negotiations over and passage of the One Big Beautiful Bill Act, which raised the debt ceil - ing and implemented certain tax and policy changes, do not appear to have resulted in any meaningful impact on overall market activity. Moreover, the Fed has signalled it will consider a rate cut in its upcoming FOMC meetings; in fact, Wall Street banks are gen - erally bullish on rate cuts, having published reports that they predict multiple rate cuts by the Fed in the remainder of 2025.
As a result, financing activity significantly picked up heading into Q3 2025, with July setting monthly records for loan repricings of USD159 billion and over - all issuance of USD222 billion, according to PitchBook LCD. Further, assuming the above trends for minimal impact from political events and potential Fed rate cuts continue to hold, M&A activity should continue to increase throughout the remainder of the year, with attractive business valuations permitting sponsors to more aggressively pursue potential new transactions. In addition, private credit funds continue to sit on sub - stantial dry powder raised over the last two years, and it is expected they will be primed to provide debt financing at competitive rates and terms to deploy this capital to fund new M&A deals. US Funds Regulatory The first half of 2025 brought significant – and largely positive – change to the US regulatory landscape affecting investment advisers and funds, primarily due to a recalibrated SEC. Following the 2024 election, the highly active and arguably confrontational regula - tory posture under former SEC Chair Gary Gensler has given way to a more measured approach under new Chair Paul Atkins. While it remains early, the SEC under Atkins’ leadership has consistently demonstrat - ed a markedly more measured approach to its core mandates of protecting investors, ensuring market integrity and promoting capital formation relative to both private fund and 1940 Act-registered fund regu - lation, through a combination of rule-making and both interpretative and exemptive actions. Shift in SEC Priorities and Tone Private funds The new administration has signalled a departure from the earlier aggressive, often punitive approach to rule- making and interpretative issues. In March, the SEC’s Division of Corporation Finance issued an interpreta - tive letter effectively providing private markets issuers with more flexibility to raise capital from accredited investors in offerings through the use of general solici - tation and advertising. The letter acknowledges that investment minimums and specific verifications could satisfy the issuer’s obligation to take “reasonable steps” to verify an investor’s status as an “accredited investor”. While this approach does not allow for full
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