Capital Markets Update: Q1 2026

Overview

Q1 2026 marked a clear shift from the issuer-friendly conditions of 2025. Total institutional loan activity fell to approximately $241B, down 32% from a year earlier, as repricing and refinancing activity slowed sharply and market tone tightened through February and March. Heading into the rest of 2026, capital remains accessible, but timing, credit quality, and preparation carry more weight than they have in recent quarters.

Market Highlights

• The repricing engine largely exhausted itself. Total institutional loan activity fell to approximately $241B, down 32% from Q1 2025, as repricings and refinancings slowed sharply while new-money issuance held up better at $69.7B, only 5% below last year.
• Spreads widened sharply as credit tiering intensified. After a constructive January, B-rated spreads widened from approximately S+288 to S+389 by quarter-end, with weaker credits facing materially higher execution risk than stronger names.
• Investor demand softened as retail outflows deepened. CLO issuance remained the anchor bid at approximately $47B, but retail loan-fund outflows of negative $7.5B pulled total measurable demand down to roughly $39.6B, contributing to a broader risk-off tone.
• The maturity wall remains most acute for lower-rated borrowers. Borrowers trimmed the 2027 and 2028 maturities, but progress was slower than a year ago, and among B-minus-and-below issuers, 29% of loans mature in 2028, reinforcing the need for proactive liability management.
• Private credit stayed open, but on more discriminating terms. Direct lending volume rose to approximately $70.8B even as deal count slipped, with execution venue increasingly depending on the balance between timing, certainty, and deal complexity.