With PE dealmaking and exit values dropping significantly in Q2, the private credit market is eager for exit opportunities. One saving grace has been strategic, non-sponsored transactions, according to Morningstar DBRS.
Data compiled by DBRS on discontinued private credit ratings show that an increasing number of borrower sales are related to strategic buyers, a separate category from sponsor-to-sponsor exits, according to a July 8 report.
"While private equity exit activity remains generally suppressed across the middle market, we are encouraged to see growing involvement from non-private equity corporate buyers and the public markets in providing liquidity," said report author Michael Dimler, senior vice president of private corporate credit at DBRS.
For the twelve months through July 3, 2026, more than half of ratings discontinuations related to sponsor exits were attributable to strategic buyers or IPOs, according to DBRS.
Several companies in recent months have announced plans to use IPO proceeds to repay their private credit loans. Applied Aerospace & Defense Inc. announced on May 8 that it would partially repay its $1.02 billion in outstanding debt with proceeds from an IPO. Other companies paying down debt with IPO proceeds include the AI tech developer Syntiant and defense technology company Aevex Corporation.
Data compiled by DBRS on discontinued private credit ratings show that an increasing number of borrower sales are related to strategic buyers, a separate category from sponsor-to-sponsor exits, according to a July 8 report.
"While private equity exit activity remains generally suppressed across the middle market, we are encouraged to see growing involvement from non-private equity corporate buyers and the public markets in providing liquidity," said report author Michael Dimler, senior vice president of private corporate credit at DBRS.
For the twelve months through July 3, 2026, more than half of ratings discontinuations related to sponsor exits were attributable to strategic buyers or IPOs, according to DBRS.
Several companies in recent months have announced plans to use IPO proceeds to repay their private credit loans. Applied Aerospace & Defense Inc. announced on May 8 that it would partially repay its $1.02 billion in outstanding debt with proceeds from an IPO. Other companies paying down debt with IPO proceeds include the AI tech developer Syntiant and defense technology company Aevex Corporation.
3 months ago
