Market Intersection: A Quarterly Look at the U.S. Credit Markets 4Q22

4Q22 Trends Recap & What to Watch Out for in 2023

Direct Lending Continued to Outpace Syndicated Deals

In 4Q22, volatile market conditions persisted, including high inflation, rising interest rates, recession anxiety and geopolitical uncertainties. The impact of these conditions was reflected in decreased loan market activity, with total sponsored middle market loan volume (both syndicated lending and direct lending) depressed, down both from 3Q22 and year-over-year as compared to 4Q21. The decline in syndicated lending (as compared to direct lending) from prior periods was more pronounced, but direct lending was not fully insulated from the effects of market instability. Nonetheless, through year-end, private credit funds continued to increase their market share and injected more new capital into the market as compared to their syndicated lending counterparts.