Q2 2026 Credit Market Update
Liquidity Holds, Selectivity Rises
- Chris Sweet, Managing Director | Head of Capital Advisory
- Scott Thomas, Senior Director
- John Stine, Director
In this installment of the Portage Point Credit Market Update, the Capital Advisory team summarizes Q2 2026 market activity, benchmarks results against prior periods, comments on key credit market developments and offers insights into the outlook for the remainder of 2026.
The Expectation
- Credit markets entered Q2 expecting a gradual shift toward mergers and acquisitions (M&A)-led issuance, supported by strong liquidity and significant private credit dry powder
- A persistent backlog of unrealized sponsor exits supporting a recovery in M&A activity
- A more stable macroeconomic and rate backdrop supporting borrower activity
The Reality
- Q2 activity remained weighted toward refinancings and liability management as the anticipated sponsor-led M&A recovery failed to materialize
- Sponsored M&A loan volume declined 54%, while sponsors represented only 45% of non-refinancing issuance
- Private credit volume fell to approximately $33 billion across 149 transactions from approximately $74 billion across 217 transactions in Q1 2026
Key Observations
- Liquidity remained supportive but activity and pricing increasingly bifurcated by sponsor participation and credit quality
- Corporate borrowers raised a five-year high of nearly $54 billion in the BSL market, up 41% QoQ
- Looking ahead, a sustained recovery will depend on M&A and sponsor re-engagement, while amendments, extensions and refinancings remain elevated
Read the full Q2 2026 Credit Market Report below
Portage Point is a business advisory and investment banking business focused on providing holistic advisory services and solutions to sponsored and non-sponsored middle market companies. The Capital Advisory team partners with clients to evaluate capital requirements, structure tailored financing solutions and run competitive and efficient financing processes to provide certainty of execution and optimize financing outcomes based on unique client goals and priorities.
The team leverages years of transaction execution experience and deep lender relationships across the credit provider landscape to develop an effective process strategy and craft thoughtful marketing materials which highlight attractive credit attributes of the business while addressing key lender concerns. In the constantly evolving private credit and middle market financing landscape, middle market companies, financial sponsors and management teams require an experienced and trusted advisor to navigate this marketplace and secure the financing required to fund business objectives.
The Portage Point differentiated, cross-functional platform enables the firm to add value for clients across a range of capabilities and solutions prior to, during and after a financing transaction, including financial and operational due diligence, transaction execution services, performance improvement initiatives and value creation and capture initiatives.
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Private credit typically refers to debt investments in privately negotiated loans or debt securities. Private credit offers potential benefits such as higher yields, customization of terms, and a focus on steady income generation, but it comes with drawbacks like illiquidity and higher credit risk due to the nature of borrowers involved.
In contrast, broadly syndicated loans are large loans provided by a group of lenders to a single borrower. Broadly syndicated loans are typically rated and have standardized terms, making them more transparent and easier to benchmark. However, they may offer lower yields and less flexibility in terms compared to private credit.
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