Houlihan Lokey – Direct Lending Update, Winter 2024

The Houlihan Lokey 'Direct Lending Update, Winter 2024' report reviews the current state of direct lending markets, highlighting key trends in refinancing, repricing, and yield dynamics. In the second half of 2024, the Fed cut the federal funds rate three times, leading to tightening credit spreads and pressure on yields. Despite these pressures, direct lending positions grew significantly, with the total fair value of BDC public investments reaching $399 billion in Q3 2024. Distress levels remain low, with stable recovery rates and minimal nonaccrual percentages, indicating strong asset quality and portfolio health.