There is movement in the market — not the frenzied kind, but the quieter sort one senses in the room when sponsors ask sharper questions and lenders take a few more days before committing. Recent conversations have had a different texture: less appetite to deploy for its own sake, more pressure to deploy well. Five observations, drawn from current processes.
Syndicated and private are now competing directly. Large-cap private debt is in open competition with the syndicated market. On many transactions above £100 million, sponsors are running dual-track processes, setting banks and funds against one another. Some high-profile borrowers — publicly reported cases include Asda and Tesco — have used that tension to secure margin reductions of around 100 basis points. The question is no longer private or syndicated; for the right credit, it is both.
Liquidity has moved down the curve — but with more scrutiny. There is more capital available in the £20–50 million segment than there was, as funds adjust ticket sizes to stay in the game. That has not made execution easier. Quality is being dissected more carefully, and timelines have lengthened — by my observation, four to six weeks longer than they were.
Structure is returning. Term sheets are tightening. Two to three covenantsis becoming the baseline again, and PIK toggles have returned to the conversation. Underwriting feels more deliberate. This is a return to discipline, and arguably to fundamentals.
Dry powder is accumulating — and not all of the response signals strength. Some £292 billion sits uninvested in Europe, with a growing share unused for more than four years. The market's response has been subordinated tranches, PIK-heavy structures, and more NAV-based lending at the portfolio level. Some of this reflects genuine opportunity. Some of it is simply a way of managing the pressure not to deploy badly.
Reputation is doing more of the work. In uncertain conditions, capital consolidates around trust. Close to 80% of global allocations now go to funds above £1 billion. Track record, increasingly, determines deal flow.
The market is not slowing so much as thinking. Fewer deals are being completed, but the ones that close are more considered — and for borrowers who come to the market prepared, that is a more navigable environment than the one that preceded it. The advantage now lies with those who understand, before they begin, how a lender will read their structure.
Laetitia Costa, Founder
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