RTR: US banks, private equity firms compete to finance debt-backed deals

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REUTERS reports:

Wall Street banks are raising billions of dollars to regain ground in lending to companies in debt-backed deals after giant private equity and asset management firms muscled in on the business over the last two years.

U.S. banks reduced lending to lower-quality corporate borrowers in 2022 as the Federal Reserve aggressively raised interest rates. Rising borrowing costs also derailed deal markets, particularly for transactions underpinned by high levels of debt.

Credit markets recovered after the Fed paused its monetary tightening late last year, encouraging banks to make a comeback in leveraged finance using their own capital and outside institutional money to expand private credit businesses.

The broader $1.5 trillion syndicated loan market has already seen a revival this year, according to Chris Long, founder and CEO of Palmer Square Capital Management, a Kansas City-based credit manager. The direct lending market is roughly half the size of the syndicated market, bankers estimate…

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