Private credit funds are pushing down their prices to keep contested deals from falling into the hands of Wall Street banks seeking to reassert their edge in lucrative leveraged lending.

The rivalry between upstart direct lenders and the likes of Goldman Sachs Group Inc. and Morgan Stanley is driving interest rate margins to new lows. Blackstone Inc. recently sought a $250 million loan at a rate of around 4.75 percentage points over the US benchmark to finance its planned purchase of Rover Group, in what would be one of the cheapest private credit loans on record, according to data compiled by Bloomberg News.

Private lenders are prepared to offer Iris Software a loan at 5 percentage points over the UK benchmark, Bloomberg News previously reported. This is 75 basis points inside Adevinta’s record loan in November, which was considered best-in-class pricing at the time. Ardonagh Group Ltd., in talks with private debt funds, may secure an even lower margin, according to people with knowledge of the matter, who asked not to be identified discussing a private transaction.

“Debt capital markets have started to recover and so there’s a bit of pent-up demand coming through,” said James Charalambides, head of European private credit at Adams Street Partners LLC. “It’s just a function of lenders’ appetite for deals and there’s a lot of competition out there.”

The cut-rate pricing is the latest salvo by private credit firms who were willing to lend through 2022’s bear market when traditional lenders retreated. Now, with high-yield and leveraged-loan markets buoyant again on the prospect of easier monetary policy, large banks are ready to underwrite fresh leveraged buyouts.

“Suddenly private credit lenders in that space are seeing fierce competition from banks,” said Alex Griffith, partner at law firm Proskauer Rose in London. “There is definitely a resurgence of other options for larger borrowers that haven’t been available for 18 months.”

Banks have begun trying to win back deals by sweetening terms and cutting pricing, including in the case of Wood Mackenzie, for which banks refinanced a $1.25 billion term loan that had been provided by HPS Investment Partners. The private equity owners of Neopharmed Gentili SpA are in talks with banks to refinance one of Italy’s largest ever direct lending deals.

Meanwhile, JPMorgan Chase & Co. is leading the bulk of a $5 billion loan sale for Cotiviti Inc., with price discussions for a $4.4 billion floating-rate term loan at a margin of about 3.50 percentage points over the benchmark after undercutting private lenders.

In response, private credit firms including Blackstone, KKR & Co., and HPS, among others, are proactively repricing existing loans to keep them on the books, according to separate people with knowledge of the matter. Private equity sponsors are often demanding between 50 and 100 basis points of discount to keep the loans with the direct lenders, the people said.

Representatives for Blackstone and KKR declined to comment, while HPS and Ardonagh could not immediately be reached for comment. A representative for Madison Dearborn Partners, which alongside HPS is a major shareholder of Ardonagh, declined to comment.

“You’re starting to hear about private credit lenders getting ahead of it in an attempt to retain good assets,” Salman Mukhtar, managing director at Barings, said in an interview. “If private lenders can match their ask on pricing or get close to it, a sponsor would probably stay on the private side.”


  • KKR & Co. served as lead investor and arranger on a $2.34 billion unitranche debt facility for MB2 Dental Solutions
  • Hayfin is leading a roughly €150 million unitranche loan to help fund private equity firm IK’s acquisition of French fire safety equipment maker Eurofeu
  • Blue Owl Capital Inc. is leading a $2 billion-plus private credit package for health care software company RLDatix
  • Direct-lending funds are in talks to provide a £950 million loan to Iris Software at one of the cheapest rates in the private-credit market
  • Sixth Street Partners is leading a group of private credit lenders providing $2 billion of debt for the buyout of software developer Alteryx Inc. by Clearlake Capital and Insight Partners
  • Nearly $10 billion of debt from direct lenders has been refinanced into broadly syndicated loans so far this year as borrowers aim to cut interest costs
  • KKR & Co. signed a deal to lend $40 million to Korean property firm Innovalue


  • General Atlantic held a final close for its second strategic capital fund, raising $2.7 billion
  • Carlyle Group Inc. is readying its first European private credit fund for wealthy individuals as it joins giants such as Blackstone Inc. in a race to tap the trillions of dollars held by the continent’s rich investors
  • Ares Management Corp. has raised A$2.6 billion for a credit fund for Australia and New Zealand, as it seeks to capitalize on opportunities created by banks retreating from leveraged lending
  • Big traditional money managers are finding that it’s taking time to capitalize on the frenzy to start private credit funds for retail investors
  • Job Moves
  • Liquidity Group, an asset manager focused on growth-stage private credit, has added three executives to lead its new financial institutions group
  • UBS Group AG has appointed Ben Sung as head of corporate book for Southeast Asia, leading its charge to boost private credit business in the region
  • Silver Creek Capital Management hired former BlackRock Inc. managing director David Matter to serve as its co-chief investment officer
  • Asset manager Amundi SA is looking to capitalize on the $1.7 trillion boom in private credit, building a team to expand in the industry and compete with direct-lending funds for new deals

This article was provided by Bloomberg News.