Private Credit Squeeze as Companies Ditch High-Interest Loans

Highly indebted companies are increasingly opting for cheaper bank loans over private credit due to higher interest rates.

A shift in capital preferences is evident from refinancing data provided by JPMorgan Chase & Co. and KBRA DLD, which show that firms with private debt are refinancing in the syndicated market about three times more often than companies with syndicated loans are tapping into private credit.

This trend underscores the impact of higher-for-longer interest rates on corporate America's effort to manage its interest burden. The data suggest that companies are seeking cheaper capital as a way to limit their exposure to rising interest rates.