Debt Download
January 25, 2024

Debt Download

Welcome to Debt Download, Goodwin’s monthly newsletter covering what you need to know in the leveraged finance market. What does 2024 have in store for the debt markets? Read on to find out.

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In the News

Goodwin Insights – Crystal Ball Predictions

For the first edition of Debt Download in 2024, we wanted to highlight the Goodwin U.S. Debt Finance team’s predictions for the coming year in leveraged finance. Here is a list of what we are expecting:

  • Private credit will continue to finance mega-leveraged buyouts but will see an increase in competition from the broadly syndicated market, which has recently started gaining momentum in pulling back issuers that were trending toward private credit deals. In order to entice issuers, banks and other arrangers of BSLs will agree to aggressive documentation terms and other concessions, which will in turn lead to loosening of terms by private credit lenders. To take advantage of this dynamic, sponsors will run dual private credit vs. BSL processes to obtain the best possible loan terms. As part of the mega-private credit deals, sponsors will continue to fill the deals with larger groups of lenders than historically. This will allow sponsors to further expand their relationships in the private credit space with receptive private credit lenders sitting on an excess of dry powder and looking to gain market share as the market heats up.
  • With sponsors and direct lenders both having large amounts of dry powder ready to be deployed, and with sponsors motivated to cash out portfolio company investments in older funds to return capital to investors after a period of limited distributions, we expect there will be an uptick in sponsor-to-sponsor LBOs by the middle of 2024. In addition, to help provide for alternative ways to provide distributions to investors, sponsors will continue to look more to NAV loan facilities to bridge the gap.
  • Liability management transactions will continue to pervade the loan market for distressed or near-distressed issuers in 2024, as more transaction structures are vetted through litigation and court proceedings and as lenders become more eager to put to work large amounts of dry powder, particularly in instances where they can improve their existing loan position in the capital stack.
  • If the bond trading prognosticators are correct that the Federal Reserve will meaningfully rein in interest rates by the second quarter of 2024, that will help unlock some of the hundreds of billions of dollars in dry powder currently held by sponsors and private credit lenders alike as M&A buyers and sellers are more likely to transact.
  • Sponsors will continue to focus on getting short term relief from cash interest payments in new senior secured credit facilities by looking to pay a portion of interest in-kind over the next year or two as they wait for interest rates to start to drop.
  • As we move further into 2024, some credit facilities entered into during the boom times of 2021/2022 will inch closer to their maturity. In order to avoid hitting the maturity wall, borrowers will continue seeking amend & extend transactions as a cheaper way to extend loan maturities than full refinancings. This will let sponsors bide their time to take advantage of declining interest rates.
  • Sponsors will ride out the latest downturn by continuing to add loan “portability” provisions in debt refinancings for existing portfolio companies that they have held for a longer period of time in hopes of enticing potential buyers with newly negotiated credit facilities as valuations start to increase again. In connection with such refinancings, sponsors will continue to consider private credit to replace existing BSLs or consider the dual-track approach mentioned above to obtain the best possible loan terms, especially in a deal where they are looking to add portability and entice potential buyers when they go to market to sell.

In Case You Missed It – Check out these recent Goodwin publications:

2024 HSR Thresholds Announced: $119.5 million; Delaware Personal Data Privacy Act: What Businesses Need to Know; FAQs About US Bank Failure; New IRS and FinCEN Reporting Requirements for Businesses that Accept Payments in Digital Assets; FinCEN Issues Beneficial Ownership Information Access Rule; Bank Regulators Issue Interagency Statement.


For inquiries regarding Goodwin’s Debt Download or our Debt Finance practice, please contact Dylan S. Brown, Nikolaus J. Caro, and Robert J. Stein.

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This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee a similar outcome.