Spreads are tightening in the US direct lending market as funds are under pressure to deploy amid an influx of money into the sector and limited deal flow, senior industry executives said at the Debtwire Private Credit Forum in New York.

Private credit markets have thrived in a low-rate, high-liquidity environment for years, with few defaults and steady returns. Restructuring experts and opportunistic investors warn that era is now ending.

In May, Paul Hastings and Davis Polk took the top spot on the lead counsel league table, while there was a four-way tie in the financial advisor category.

Direct lending activity in the US climbed to impressive levels in the first quarter of 2025. More than USD 66bn was deployed across 640 deals, showcasing the market’s resilience and growth during times of both high volatility and relative calm.

Argentine banks, including Banco Macro and Banco de la Nacion Argentina, are eying the international and domestic bond markets to obtain funding. The institutions seek to further expand their loan portfolios amid a lag in deposit growth.

Azul requested Chapter 11 with the US Bankruptcy Court for the Southern District of New York on the 28 May, following multiple rounds of out-of-court restructuring efforts.

Direct lenders to middle market companies are pulling back as tariff uncertainty clouds the economic outlook, creating an opening for special situations investors to step in with rescue capital and hybrid financing structures.

JPMorgan Chase recently provided a private loan to ThreeSixty Group, the owner of the Sharper Image, FAO Schwarz and Vornado brands.

An ad-hoc group of creditors to Sunnova is discussing a proposal to provide the residential solar company with a USD 20m new money bridge loan to shore up liquidity ahead of an expected bankruptcy filing.

Albanesi has selected advisors for its debt restructuring talks with creditors, including with holders of its 11% senior secured notes due 2031, after it announced it would miss a USD 19.6m coupon payment that was due today.

Human genomics and telehealth company 23andMe recently filed for bankruptcy protection in the Eastern District of Missouri. The company says that it intends to use Chapter 11 to run a sale process for its assets.

Sunnova recently furloughed many employees after issuing a going concern warning in early March.

Leveraged finance issuance across the US and European institutional loan and high-yield (HY) bond markets reached USD 509bn in 1Q25 year-to-date, broadly in line with the first quarter of 2024 and 6% down on 4Q24.

Second lien lenders including HPS Investment Partners are providing new money to EagleView to help facilitate an amend and extend transaction to address upcoming debt maturities.

There has been a recent sense of encouragement coupled with a tinge of disappointment for investors craving new bond supply.

Japanese investment firm ORIX Group is in talks to back Hilco Global to help support the financial services business’s growth ambitions. Orix is expected to pay out over USD 1bn over several years to senior Hilco executives as part of the deal.

23andMe, a human genetics and biotechnology company providing DNA testing kits directly to consumers, has entered Chapter 11 protection to undergo a court-supervised sale process.

Existing lenders to Tropicana have offered the company around USD 400m in new financing as discussions regarding a liability management transaction continue.

Brazilian distressed companies led the way for in-court restructurings in Latin America in 2024, with 10 of the 14 situations commenced last year:

Solar company Sunnova Energy has beamed a steady stream of negative news since early March. First, the company issued a going concern warning in its 2024 10K.