KKR’s Sheldon Sees a Migration From Leveraged Loan Market (1)

KKR & Co. sees a structural shift underway in corporate credit with borrowers moving away from leveraged loans as markets struggle to completely thaw after the banking crisis.

Institutional loan issuance lagged in the first quarter of the year, while high-yield bond issuance remained relatively strong and private credit continued to take market share, Christopher Sheldon, co-head of credit and markets at KKR wrote in an investor letter seen by Bloomberg.

In Europe, high-yield bonds financed a larger proportion of leveraged buyouts in 2022 than any time since the financial crisis, according to Sheldon.

“Leveraged credit borrowers have been ...