Credit Markets Update Q4 2023

Read more about the credit markets activity during Q4 2023

Mike Rudolph

Mike Rudolph

Managing Director, KPMG Corporate Finance LLC

+1 708-391-7342

Overall leverage loan volumes continued to decline in 2023 as higher rates significantly muted M&A activity. Borrowers instead focused on amend-and-extend activity and extending maturities

  • Fourth quarter new issue leveraged loan volume reached $72.3 billion, an increase from $67.1 billion in the same period in 2022, and a decline from $103.0 billion in the third quarter of 2023
    • M&A volumes, after a relatively modest recovery in the third quarter, declined again in the fourth quarter reaching $19.8 billion, closing the year at $99.4 billion, down 53% compared to 2022, driven by a higher rate environment
  • Refinancing activity was the main driver in the fourth quarter, capturing over 60% of fourth quarter loan volume and 57% of 2023 total loan volume
    • Borrowers focused on refinancing activity in order to extend maturities
    • Repricing activity remained popular in the fourth quarter, particularly with borrowers who issued debt earlier in the year who took advantage of market conditions to lower spreads
  • Sponsored M&A financings marked its lowest level since 2011, with $24.3 billion printed in 2023, and its second consecutive annual decline

New Issue Leveraged Loan Volume ($bn)

U.S. Institutional Refinancing Loan Volume ($bn)


Count of LBOs financed in broadly syndicated vs private credit markets

Annual high yield volume increased to 176.1 billion in 2023 versus $102.3 billion in 2022 behind a more dovish tone from the Fed

  • Fourth quarter volume of $41.3 billion recorded a significant improvement versus $15.4 billion in 2022, as a result of dovish signals emanating from the Federal Reserve indicating the possible conclusion of rate hikes
  • The average yield at issuance closed the fourth quarter at 8.26%, recording a consistent decline from the second and third quarters

High Yield Volume ($bn)

The Federal Reserve maintained interest rates unchanged, while indicating a possible lower target range in 2024

  • The Federal Reserve signaled the possibility of rate reductions during 2024 to address concerns around the impact of “overly restrictive" monetary policy on economic activity
  • Continued geopolitical uncertainty and upcoming U.S. election are expected to play a key role in policy decisions in the coming year

Secured Overnight Financing Rate (SOFR)

We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.


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