Jumbo volume in 1H 2022 reaches $30.8 billion to bring total tally to $86.5B

Volume in the first half of 2022 for private loans sized at $1 billion or more has reached $30.8 billion, a level that dwarfs the $9.5 billion recorded in the same period last year, according to Direct Lending Deals.

On a total basis, overall jumbo volume stands at $86.5 billion, a 55% increase from $55.7 billion at the end of 2021, according to DLD.

A pair of late June deals propelled volume higher this month: Zendesk, which took the top slot for biggest private loan ever, and Unified Women’s Healthcare.

June has seen $9.8 billion in private jumbo financing and replaces May as the second highest monthly tally ever behind the $10.3 billion in November last year.

Choppy access to both the high yield and syndicated loan markets has increased the average size for private jumbo financing, to about $2 billion. In last November’s frothy M&A conditions, the average size was $1.3 billion.

Zendesk and Unified Women’s Health exemplify two running trends: 1) the robust underwriting capacity for jumbo private loans—Zendesk will close at a minimum of $4.8 billion and includes at least $750 million in delayed-draw capital; and 2) the rerouting of financing to the shadow market—Unified Women’s Health refinanced out of a 1L/2L syndicated package.

Direct lenders expect the second half of 2022 to generate a strong pipeline of jumbo financings. Sponsors are increasingly turning to shadow banking for certainty of terms and quick closings. Jumbo private loans totaled $37.5 billion in the second half last year alongside record M&A volume. While the 2022 acquisitions calendar has been softer, volatile financing conditions are clearly pushing more business to direct lenders.