Following an extended period of reduced activity, the leveraged finance market observed a welcome resurgence last year, the busiest 12-month period since 2021, but what will 2025 hold? Discover the impact of 2024 events on the leveraged finance market and read our ten predictions for 2025 in our concise annual report.
2024: The Year in Review
2024 marked a significant resurgence in the leveraged finance market after a period of reduced activity. The combined volume of leveraged loans and high-yield bonds across US and European markets more than doubled compared to 2023. This resurgence was driven by improved M&A activity, strategic repricings, opportunistic financings, distressed reorganizations, and new financial products. With inflation easing globally, central banks entered rate-cutting cycles, and the global economy remained resilient, while recessionary fears faded.
Key Themes from 2024:
- High-Yield and Leveraged Loan Markets Rebound: High-yield bond issuance rebounded significantly, while institutional loan issuance reached record highs.
- M&A Activity: Both M&A and leveraged buyout activity rebounded from the significant downturn seen in 2023, although activity remains below the peak volumes recorded in 2020 and 2021.
- Private Credit Market Growth: Private credit markets continued to grow, offering alternative funding avenues to companies unable or unwilling to access public markets.
- ESG Matures and Stabilizes: The transition to sustainable finance and the pursuit of net-zero emission targets were prominent trends, especially in EMEA.
- Distressed Debt Plays a Part: Many issuers turned to distressed debt exchanges to address upcoming maturities and tight liquidity.
- AI Revolution: Generative AI showed potential to transform whole industries and functions. Continued investments and developments were seen in algorithmic trading, fraud detection, customer service automation, and risk management.
- Digital Bonds: With landmark issuances of digital bonds over the past years, the blockchain bond market more than doubled in size compared to 2022.
Ten Predictions to Shape 2025
Looking ahead, the leveraged finance market in 2025 is poised for a positive trajectory. Read our ten predictions for the year ahead!