Houlihan Lokey – Direct Lending Update, Fall 2024

The Houlihan Lokey 'Direct Lending Update, Fall 2024' report highlights the trends in the direct lending market, focusing on refinancing, repricing, and yield dynamics. In Q2 2024, direct lending continued to grow in net market share, driven by competitive pricing and interest rate cuts by the Fed. First lien yields decreased slightly, while second lien yields remained stable. The nonaccrual percentage for BDC loans rose slightly, but distress levels stayed low. The report also notes the increasing use of the “portability” feature to manage debt amid high dry powder levels and expected widening spreads.