LPC - Lending Lowdown Series Episode 35 | Middle Market Direct Lending State of Play
Sep 4, 2025
In this engaging discussion, Tom Newberry, Chief Credit Officer & Executive Chairman at Sound Point Capital Management, dives into the U.S. middle market direct lending landscape. He reveals that deal volumes dipped significantly in the first half of 2025, contradicting expectations for a booming year. Topics such as the transformation from bank-led syndications to institutional lending, fundraising challenges, and navigating economic headwinds are all explored. Newberry's insights shed light on the evolving dynamics and strategies crucial for success in this competitive market.
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Institutional Capital Replaced Banks Over Time
- Bank pullback and regulatory capital rules shifted lending toward institutional investors over decades.
- Institutional capital, CLOs and funds have transformed the loan market's structure and scale.
Large Private Deal Felt Like 1998
- Tom compared a recent $3bn private credit deal syndicated to 22–23 direct lenders to how leveraged deals were syndicated in 1998.
- He noted the main difference was a fund-led arrangement instead of a bank-led one.
Deal Volumes Down But Deployment Can Outpace Peers
- Direct lending deal volumes in H1 2025 fell roughly 25% amid tariff-driven uncertainty.
- SoundPoint still deployed more dollars in H1 2025 than H1 2024 and remained ahead of plan.