The Faster, Smarter Way to Find Leveraged Finance Intelligence (9Fin)

What happens when the booming asset class of GP-led private credit secondaries meets macro volatility provoked by the Iran war, private credit's version of the SaaS-pocalypse and a wave of BOC redemptions? Reassuringly for the market, the answer is: deals get done, with the volume of transactions even rising. That said, buyers want to be compensated for the extra bit of risk with an extra bit of discount. "In Q2 this year, based on the deals we've seen, I'm of the view that pricing has started to soften. Some deals are still being priced at par, but over the past few weeks pricing has ranged between 92% and 99% of FMV," said Thiha Tun, Investment Funds and Capital partner in London. That's in contrast with last year, when "credit secondaries were generally priced at 95% or more of FMV, and many of the large headline deals that came to market were priced around par, with the highest pricing reaching a premium to FMV", he added. The data shows that volume is running high, but anecdotally, some transactions were trickier to bring to the finish line in H1. It might have been just a blip, as the market has recently picked up again. "A number of transactions were paused or aborted in Q2, but over the past few weeks we've seen activity suddenly come back," said Goodwin's Tun. "2026 will probably be a record year. The current market reminds me of Q2 2025, when activity slowed following Trump's Liberation Day, before the backlog was worked through in H2," he added. Another factor which could support the impetus of credit GP-leds is the expansion of private equity GP-leds. It's becoming increasingly common for PEs to transfer an asset into a continuation vehicle rather than exiting it through an M&A sale or IPO, and that has implications for when the loans are repaid by the portfolio companies, Tun said. Direct lending funds may "end up holding loans for longer than originally anticipated and if these loans are held in a fund which is coming to the end of its life, but the underlying quality of the loan portfolio is good, this can be the basis on which the manager may sponsor a credit continuation vehicle," he added.

Read the 9Fin article for more.