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2025 Highlights
The start of the year saw a combination of optimism and tight market conditions. Activity slowed sharply after the first tariff announcements in April, as many companies shifted focus to assessing tariff exposure and reinforcing supply chains. Several issuers our office had previously engaged with paused activity, deferring non‑essential financing until they had more clarity. However, by September, deal appetite improved significantly. Tariff‑related risk premiums eased, and many companies accepted that uncertainty would remain part of the day-to-day operating environment.
A defining theme of the year was the breadth of our capabilities across financing types, currencies, and structures, along with our ability to adjust quickly as borrower preferences and market conditions evolved. Multi‑currency funding, particularly in Canadian dollars, was also a significant driver of our activity.
Private Placements
For private placements, the year followed the broader pattern: strong start, muted second quarter, then an increase in activity during the latter half of the year. Overall, activity skewed toward existing portfolio issuers, particularly those where we maintain long‑standing, direct relationships.
Beyond refinancings, we also supported increased corporate M&A, where Shelf Facilities played a key role. Due to the underwriting and documentation being completed upfront for Shelf transactions, we were able to respond quickly with firm quotes and lock in borrowing rates. We anticipate that Shelves will remain important in 2026 given issuers’ desire for efficient execution and access to capital at attractive points in the rate cycle, even amidst market volatility.
Sector exposure was diverse. Companies with cross‑border supply chains, common in manufacturing and industrials, were more cautious due to tariff uncertainty. Conversely, sectors with largely domestic operations or limited physical goods/assets exposure, such as business services, moved with fewer delays.
Direct Lending
Sponsored activity dominated our direct lending production in 2025. While opportunities to finance new LBOs remained relatively muted, repricing, refinancing and recapitalization deals were quite common. As spreads tightened and rates declined in the second half of the year, we saw a strong demand for repricings emerge. While we and the market were more cautious on sectors exposed to discretionary spending, cyclicality, or project‑based revenue, strong performers within these sectors were still able to get deals done, and borrowers with strong equity support or with limited tariff exposure were more willing to pursue opportunities.
Outlook for 2026
We feel optimistic about 2026 opportunities. The pipeline build that we saw in late 2025 should hopefully translate into deal activity during the year, assuming external factors align.
There are significant maturities from deals completed in 2021–2022, and even pre‑COVID, that require refinancing this year. We’re working closely with borrowers on managing higher interest expense resulting from higher rates through currency mix, tenor selection, amortization, and other structuring levers. We anticipate supporting borrowers’ financing needs in relation to increased M&A activity and for elevated capital spending resulting from higher permitted rates of depreciation allowed in the Big Beautiful Bill.
We expect activity to be broad across sectors, though macro risks remain: geopolitical events, policy shifts, and unpredictable timing of interest‑rate adjustments, among others. Borrowers will also need to adjust to structurally higher rates compared to the pre‑COVID era and diversify funding sources.
We expect ongoing demand for creative capital solutions across both primary and secondary markets, and believe that our long-term relationships and flexible investing mandates position us well in the coming year.
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