The Private Credit-to-Bank Lending Pendulum Reversal

The Private Credit-to-Bank Lending Pendulum Reversal

The dramatic market share gains of private credit over traditional bank syndicated lending have experienced a notable reversal in 2026, culminating in mid-July with some of the largest private debt packages on record migrating back to the Broadly Syndicated Loan (BSL) market. As competition between investment banks and direct lenders intensifies, corporate borrowers are capitalizing on tighter BSL spreads to refinance expensive private credit facilities, returning massive corporate loans to public markets.

The $4.1 Billion Catalent Debt Pivot

In one of the most significant examples of this migration, contract drug manufacturer Catalent (owned by Novo Holdings) is lining up a roughly $4.1 billion loan in the broadly syndicated market to refinance its massive private debt package.

• The Original Deal: The original private credit facility was led by Ares and Blue Owl in late 2024 to finance Novo Holdings' $16.5 billion acquisition of Catalent. It was one of the largest direct lending transactions on record, priced at SOFR + 500 bps and set to mature in December 2031. A consortium of business development companies (BDCs)—including Antares Strategic Credit Fund, Apollo Debt Solutions, Ares Capital Corp., Blackstone Private Credit Fund, Blue Owl Capital Corp., Goldman Sachs Private Credit Corp., and Golub Capital BDC—held portions of the first-lien loan under the borrower name Creek Parent Inc.
• The Refinancing: Co-led by JPMorgan and Morgan Stanley, the new BSL facility will completely replace the direct lending package. This follows a similar path paved by Vista Equity-backed Finastra, which refinanced its landmark $4.8 billion unitranche loan in the syndicated market.

Baker Tilly's $3 Billion Refinancing Campaign

Similarly, accounting and advisory firm Baker Tilly Advisory Group (backed by Hellman & Friedman) is preparing to market approximately $3 billion in debt through Deutsche Bank to refinance existing private credit loans.

• The Original Deal: In early 2025, Blackstone led a group of private lenders to provide a $1.5 billion private debt package (priced at SOFR + 450 bps) to support Baker Tilly's merger with Moss Adams.
• The Refinancing: The proposed Deutsche Bank-led transaction will refinance the Blackstone-led merger debt along with other acquisition borrowings, moving Baker Tilly's debt structure into public markets to broaden its lender base and reduce interest costs.

Spread Compression and Market Dynamics

This refinancing wave is driven by a stark pricing mismatch between private and public debt markets, combined with robust investor demand for syndicated paper.¹ According to data from Octus:

• In the healthcare sector, senior direct lending refinancings priced at an average spread of SOFR + 522.5 bps in Q2 2026 (down from SOFR + 526.4 bps in Q1 2026).
• By contrast, the BSL market is offering significantly tighter pricing, allowing large corporate borrowers who originally turned to private credit during the 2022–2024 banking pullback to secure substantial interest savings by returning to traditional bank-syndicated structures.