A surge in mega-deals propelled direct lending volumes in the three months ending Nov. 30, helping to narrow the year-over-year decline of lending volume for the asset class to 9% through November, from 15% in October, according to LCD data.
The November US Private Credit Monitor showed that transaction volume rose to its highest level since Q2 2024 in the three months to Nov. 30, with $69.8 billion of direct lending volume tracked by LCD. Transaction count, however, was the lowest since Q4 2023 during the same period, with only 201 deals tracked.
This suggests that direct lenders are benefiting from increased volatility in BSL markets, particularly providing a boost in the upper-middle market where direct lenders compete more directly with liquid credit alternatives. November activity alone features seven deals done by direct lenders of at least $1 billion, the highest monthly count this year.
The volume of LBO deals financed by direct lenders also surged in the three-months ended Nov. 30, climbing to its strongest level since Q2 2022 at an estimated $23.7 billion, compared to about $20 billion on average for the first three quarters of the year.
Q3 BDC filings showed that origination outpaced repayments and exits for top lenders, shifting most portfolios back to growth, reversing the trend of the first half of 2025. BDC activity continues to lag recent years, however, as gross fundings for the top 12 BDCs tracked in a recent LCD analysis totaled about $24.7 billion through Q3 2025, down over 13% from the $28.4 billion recorded in the same 2024 period.
The volume of direct lending loans refinanced into BSL markets declined in the three months ended Nov. 30, to $5.1 billion, from $10.2 billion in Q3, which was elevated by Finastra. Overall refinancing activity in the BSL market plummeted in November amid more cautious investor sentiment, totaling only $2.7 billion compared to a monthly average of $18 billion from January through October.
That could be changing in December, however, as two jumbo deals starting off the month — Pye-Barker and BradyPLUS — will both be used to refinance debt provided by direct lenders.
Consistent with investor commentary, credit spreads have largely held steady, as the median was unchanged from Q3 at S+475.
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