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Weekly Market Summary
Dec 22 to Dec 26, 2025
Extra Credit*
- Private equity sponsors have paid themselves $43.6 billion in dividends from the US broadly syndicated loan (BSL) market so far in 2025, marking the highest annual total since the Global Financial Crisis (GFC). This figure is 24% higher than the previous recent peak in 2021, when debt costs were at historic lows.
- The surge in dividend recapitalization loans is driven by a challenging exit environment for private equity sponsors and generally favorable credit market conditions. With traditional exits like IPOs and M&A remaining difficult, sponsors are turning to dividend recaps as an alternative way to return capital to investors.
- In total, PE-backed companies issued $70.2 billion in leveraged loans for dividend recapitalizations through December 8, 2025. Not all proceeds go directly to private equity owners, as many of these transactions also refinance existing debt, but the overall volume is already higher than any full year except 2021.
- The resurgence of dividend recaps raises questions about balance-sheet resilience and lender discipline, as companies take on more debt to pay out dividends. While favorable credit conditions have enabled this activity, there are concerns about the potential risks if economic conditions deteriorate or if credit markets tighten.
Morningstar as of 12/21/2025
Previous reports
*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Credit Suisse Leverage Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.
Past performance does not guarantee future results. Index performance is not indicative of fund performance. Indexes are unmanaged and it is not possible to invest directly in an index.
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