Private Debt News Weekly Issue #44: Spreads Compress, Defaults Mount, and Retail Capital Surges
Citigroup & Apollo Offer Record-Low LBO Rates, Larry Fink Pushes Retail Access, and Private Credit Tests Its Limits
Spreads are tightening, tariffs are biting, and everyone—from billionaires to AI entrepreneurs—is racing into private credit. This week, Citigroup and Apollo offer one of the cheapest private financings of the year, BlackRock’s Larry Fink pledges to bring private markets to the masses, and defaults continue to pressure lenders amid macro uncertainty. Meanwhile, firms like BC Partners, Capital Four, and AlbaCore are raising billions, betting that investor appetite hasn’t peaked.
From tech venture debt to new retail-focused fund launches, here’s your full breakdown of what’s shaping private credit this week.
Key Market Trends
Spreads Compress to Cycle Lows as Tariffs Shake Markets
Amid geopolitical uncertainty and tariff-driven volatility, private credit lenders are slashing margins and leveraging up to stay competitive.
SolarWinds Deal:
Thoma Bravo is offloading part of a $525 million second-lien loan priced at SOFR + 600 bps, rated Caa2.
Volatility has made it harder to place riskier paper, but funds are stepping in to support LBOs that banks won’t touch.
Jeppesen Financing:
Citigroup and Apollo are offering a $3.5 billion staple financing at SOFR + 450 bps, one of the cheapest LBO spreads of the year.
Flexible, covenant-lite terms illustrate how far private credit is willing to bend to win marquee deals.
Defaults Mount as Tariff Anxiety Chokes Syndicated Loan Demand
The ABC Technologies–TI Fluid Systems deal is struggling to clear, showing how macro risk is stalling debt markets.
Key Metrics:
Loan priced at SOFR + 550 bps, with OID between 95-96 cents, reflecting investor skittishness.
Market stress ahead of Trump’s April 2 tariff rollout is raising concerns around cross-border M&A and trade-exposed credits.
Why It Matters:
Deals like ABC/TI Fluid and Chuck E. Cheese’s stalled refinancing are a red flag for lender appetite, especially as banks approach funding deadlines.
Capital Raising & Fund Launches
BC Partners Raises $1.4 Billion for Special Opportunities Fund
BC Partners Credit’s SOF III fund is 20% larger than its predecessor and focused on sports, entertainment, and asset-backed finance.
Notable recent deals include $400M for Riddell (football helmets) and a strategic alliance with Piper Sandler.
Capital Four Closes €3 Billion Senior Debt Fund
The fifth fund vintage, focused exclusively on first-lien senior debt in the Nordics, DACH, and Benelux.
Most loans are sustainability-linked under EU Article 8.
AlbaCore Raises $1.8 Billion for New Senior Lending Fund
Backed by ADIA and MUFG, targeting large-cap software, business services, and education deals in Europe.
Luke Gillam, ex-Goldman partner, now leads AlbaCore’s senior direct lending strategy.
Retail Capital Pushes Further In
Apollo’s S3 Fund Offers 3% Bonus to Early Investors
Apollo is breaking from convention by offering retail investors a 3% fee rebate if they hold for three years.
The 6.6% all-in cost is offset by no performance fee, aiming to court the $150 trillion+ global wealth market.
Larry Fink Wants to "Unlock" Private Markets for Main Street
BlackRock plans to include 15%-20% private assets in model portfolios.
The firm is positioning alternatives as a new core component of 401(k)s, alongside stocks and bonds.
Fink’s message: the future is 60/20/20, not 60/40.
Strategy & Talent Shifts
AI Enters Private Credit: Clearview Co-Founder Joins Architect Capital
Hoan Ton-That, ex-CEO of controversial facial-recognition firm Clearview AI, has joined Architect to build tech-enabled venture credit strategies.
Architect lends against SaaS customer contracts, and in default, takes over operations to service the contracts directly.
Loans can reach 5x ARR, backed by operational capability rather than the company itself.
Goldman Talent Keeps Fleeing to Private Credit
Luke Gillam, formerly head of EMEA credit capital markets at Goldman Sachs, says leveraged finance is too cyclical compared to the structural growth of private markets.
Joins a long list of bankers fleeing to alternatives, citing fat carry and lifestyle upside.
Global Developments
Brazil: Itau Bets on Securitization With FIDCs
New fund targets qualified investors with tax-deferred gains and limited liquidity.
Brazil’s FIDC market saw net inflows of 120.9 billion reais in 2024, up nearly 4x since 2018.
Australia: Call for Transparency Framework Like U.S. BDCs
A Financial Review op-ed urges Australia to adopt BDC-style disclosure rules, arguing that greater transparency builds trust and capital formation.
In a retail-heavy market, standardized reporting may be necessary to sustain growth.
Forward Outlook
Spreads Will Stay Compressed Until M&A Revives
Pricing power sits with borrowers. Lenders are absorbing weaker covenants and higher leverage to get deals done.
Retail Will Be the Growth Story in 2025
With Blue Owl, Apollo, and BlackRock aggressively courting Main Street, distribution wars are underway.
Expect More "Staple Financing" Packages
Apollo/Citi’s Jeppesen deal may be the first of many. Private credit firms will partner with banks to lock up deal pipeline early.
Scrutiny on Defaulted Credits Will Intensify
As spread compression continues and macro risks grow, expect more defaults in lower-rated tranches—especially in software and auto sectors.
Venture Debt Will Get Riskier—And Smarter
Strategies like Architect Capital’s contract-takeover model may become a blueprint for higher-yield, lower-default venture credit structures.
Final Takeaway
Private credit’s “everything all at once” moment continues: pricing power is weak, but fundraising is strong. With banks creeping back, default risks rising, and Main Street pushing in, this next chapter will test whether private credit can scale with discipline—or if margins and structures will crack under pressure.
Stay tuned with Private Debt News Weekly—your source for insights, trends, and signals driving the future of private markets.