Uncertainty pressured middle market private loan formation in 2023, as macro uncertainty and still-volatile interest rates dampened the M&A activity that drives these loans. Limited new issuance industrywide focused capital deployment on existing borrowers and smaller “add-ons” by private equity sponsors.

Demand for asset-based lending was strong during the year, as it tends to be during times when other financing options become less plentiful—a dynamic that was particularly evident in the aftermath of the regional bank challenges.