US direct lending issuance weakened in 3Q26, marking its third consecutive quarterly decline. Volume fell 3% quarter-over-quarter to US$61bn, 30% below 1Q26 levels and 44% below the recent high reached in 4Q25. Over the first nine months of 2026, issuance declined 22% year-over-year to US$212bn.
Concerns over the potential impact of AI on software companies, which account for a significant share of private credit lending, and their valuations are among the factors that weighed on deal flow. Issuance declined across most use of proceeds categories in the first nine months of 2026, with add-on M&A financing falling 9% year-over-year and refinancing volume dropping 49%. In contrast, LBO financing bucked the broader trend, rising a moderate 10% over the same period.
Latest news
M&A activity begins to tick upward
In the third quarter of 2026, acquisition-linked loan volume across North America and Europe reached about $47 billion, up from $30.6 billion in Q2 and $29.5 billion a year ago.
$1trn and counting
Investor allocations to private credit climbed by nearly a quarter year-on-year as positive sentiment shows no sign of weakening. The…