KPMG: Megadeals Boosted Q1 Credit Market Despite Geopolitical Volatility
A recent KPMG report highlights that the credit market experienced a strong start in the first quarter of 2026, driven primarily by significant mergers and acquisitions (M&A) activity. New-issue leveraged loan volume reached $173.3 billion, marking an increase from the previous quarter but a decline compared to the same period last year. M&A-backed institutional loans surged to $74.6 billion, the highest level since early 2022, accounting for nearly half of all institutional loan volume. However, market sentiment deteriorated significantly in March due to the United States' war in Iran, which introduced volatility, oil-price fluctuations, and uncertainty regarding interest rate cuts. High-yield bond issuance totaled nearly $80 billion with an average yield of 7.08%, starting strong before softening amid geopolitical tensions. While high-quality issuers maintained market access, S&P Global warned of rising systemic risks in private credit due to complex asset structures. Despite current disruptions, surveys indicate that CFOs remain optimistic about future acquisition activities, suggesting potential growth later in the year if stability returns.
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