Spread (basis points) of PE-backed deals and LBOs in the direct lending market in 2026

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In the US, buyout activity remained paltry, as deal count for direct lending LBO financings fell to its lowest level since Q3 2023 in the three months ended July 31, according to the latest US LCD Private Credit Monitor. The continued pullback in LBO activity suggests that sponsors are hesitating to launch deals amid the higher-for-longer interest rate backdrop. European LBOs have seen a rise in estimated volume due to some larger transactions over the past three months, such as Recordati, CloserStill Media, and GBA Group, with the number of LBOs remaining below 20 during this period, with estimated volume the highest since Q4 2025.