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Opinion CLOs
Are unusual deals from Clearlake and JPMorgan signs of things to come?
by Lisa Lee
Lisa Lee
Managing editor
Creditflux
Deals that would have gone to public markets switched to private credit
These are uncommon times for financial markets, as they move to the whims of US President Donald Trump. Bankers who danced at the prospect of a second Trump administration have turned sober and instead are on edge at what might come next, which has become nearly impossible to discern.
Uncertainty has become the byword. So has liquidity. Neither words are those of a bull market. Your columnist was at this year’s Milken Institute Global Conference in Beverly Hills, California, where the bigwigs of finance gather annually to hobnob with world leaders, authors, scientists and a smattering of celebrities. Though many sounded cautiously optimistic on stage, the mood was definitely subdued compared to years past.
‘Trade and relationships will be stronger’
US Secretary of the Treasury Scott Bessent opened the conference with full-throated support for the controversial economic plans that set 145% tariffs on China and could potentially spark a trade war. Getting better terms of trade isn’t easy, he reminded listeners. “It’s not always a pleasant process, but I think at the end, the trade and relationships will be stronger,” Bessent said.
In a surprise, Bessent veered from geopolitical and macro-economics to the realm of debt financing, and in particular, private credit. “I think private credit is an incredible new bolt-on to the world’s deepest capital markets,” Bessent said, while seated next to Michael Milken, the man who pioneered LBO debt markets.
It’s early days for the trading regime which has been ushered in by Trump’s tariffs. While US equity indices — which went into freefall in the immediate aftermath of the ‘Liberation Day’ tariff announcements — have mostly clawed their way back, and most segments of credit markets likewise retraced to their levels before the announcements, there are lingering tell-tale marks of uncertainty.
A number of acquisition financing deals that would have gone to the public high-yield and leveraged loan markets switched to volatility-immune private credit lenders. More are likely to follow suit, despite capital markets reopening.
Goldman Sachs reckons that for leveraged buyout financings, private credit is grabbing the lion’s share. In 2023, when banks were more reticent, private equity sponsors raised USD 31bn from the broadly syndicated market and USD 60bn from private credit, to back their LBO deals. In 2024, when buyers piled into public leveraged finance markets, the mix was USD 53bn for broadly syndicated backers, compared to USD 88bn for private credit. So far in 2025, that has rebalanced to USD 22bn and USD 26bn respectively. But with market volatility heightened, the shift will likely trend back in private credit’s favour.
In these uncommon times, a most unusual financing has materialised. When Clearlake Capital tossed in its winning bid for data and analytics company Dun & Bradstreet, the private equity shop came with a USD 5.75bn loan maturing in 364 days — something no-one in the leveraged finance market can remember happening before. A 364-day loan simply hasn’t ever been used for acquisition financing.
Clearlake is taking a gamble. If it can’t raise longer-maturity debt to replace what it got from a bank group that includes Morgan Stanley, Goldman Sachs, JPMorgan and Ares Management, then it may be obliged to hand over the keys. No private equity shop wants to turn over a company to lenders, especially within a year of purchase. The slug of debt to equity is huge — akin to the LBO capital structures before the Great Financial Crisis — and so Clearlake may have to put in more equity to get new lenders and new financing.
JPMorgan joins major deal in private credit
Another Wall Street player that made a bold move during the recent volatility was JPMorgan. In the USD 4bn private credit loan backing Thoma Bravo in its purchase of Boeing’s Jeppesen navigation unit for USD 10.6bn, JPMorgan appeared as the third-largest lender. The bank was only smaller than Apollo and Blackstone in the deal, and larger than Golub Capital, KKR, and Oak Hill Advisors — each took down around the same amount — followed by Ares, Blue Owl, Canadian institutional investor PSP and Thoma Bravo’s own credit platform, Thoma Bravo Credit.
JPMorgan began using its balance sheet for direct lending in 2021, but until recently tended to be a small lender on large deals.
The bank has taken a major step into large cap direct lending as Donald Trump settles into his presidential term. The financial markets have long held a perception that the Trump administration will loosen regulatory scrutiny of banks and be less critical of how they handle risk capital. And according to Bessent at the conference, they can look forward to deregulation to come.
