Key Takeaways
- • Proskauer analyzed 450+ private credit deals totaling $123.6 billion across 120 private equity sponsors throughout 2025, marking the firm's 15th annual market assessment and providing the broadest institutional lens into deal-level trends.
- • Lenders moved decisively upstream, with 39% of loans extended to companies with $50mm+ EBITDA (up from 35% in 2024), signaling a structural shift toward larger, more established borrowers and away from smaller credits.
- • Average closing leverage ticked to 5.1x from 4.8x in 2024, while average debt capacity reached 6.3x, leaving 1.2x of undrawn leverage capacity—indicating cautious positioning despite incremental leverage expansion.
- • Equity contribution ratios contracted to 46% of total capitalization in 2025 from 47% in 2024, driven by declining use of equity cushions exceeding 50%, reflecting tighter sponsor capital deployment across the market.
- • Covenant-lite structures represented 21% of deals but concentrated almost exclusively in larger credits (91% of cov-lite deals had $50mm+ EBITDA), while European cash margins compressed to 5% average, indicating pricing pressure in secondary markets.
Summary
Proskauer Rose's 15th annual Private Credit Insights Report, released February 9, 2026, provides institutional investors and alternative asset managers with granular market intelligence across 450+ transactions executed in 2025. The $123.6 billion transaction universe represents material private credit deployment, capturing origination patterns across approximately 120 sponsors and establishing a high-resolution baseline for market positioning heading into 2026.
The most significant trend identified is the continued migration toward larger borrowers and larger check sizes. Nearly two-fifths of 2025 originations targeted companies with minimum $50 million EBITDA thresholds—an acceleration from 35% in 2024. This upmarket movement reflects institutional capital concentration, sponsor preference for lower-touch, less labor-intensive credits, and likely supply-side constraints in sub-$50 million EBITDA segments. Sector concentration remained remarkably stable, with Healthcare/Life Sciences, Manufacturing, Software/Technology, and Business Services collectively accounting for 57% of deal volume, suggesting disciplined focus within institutional private credit allocations.
Leverage metrics reveal measured expansion coupled with preserved debt capacity cushions. Average closing leverage of 5.1x (up from 4.8x) indicates modest multiple expansion, but critical nuance emerges in the debt capacity data: 6.3x average debt capacity leaves 1.2x of undrawn cushion at closing. This structural gap suggests lenders and sponsors are maintaining optionality for future add-on acquisitions or refinancing flexibility rather than fully deploying available capacity at entry—a conservative positioning that may reflect macroeconomic uncertainty or disciplined underwriting standards.
Equity contribution dynamics shifted toward lower sponsor capital injection. Equity as a percentage of total capitalization declined to 46% in 2025 from 47% in 2024, driven specifically by a material reduction in deals featuring equity contributions exceeding 50%. This compression reflects both sponsor capital preservation and lender willingness to structure more levered entry points, though it raises medium-term refinancing risk profiles.
Covenant-lite structures represented 21% of 2025 deals but concentrated overwhelmingly in the upmarket segment (91% of cov-lite deals featured $50mm+ EBITDA borrowers), underscoring the two-tiered credit market: larger, lower-touch credits enjoy structural flexibility while smaller mid-market names retain covenant protections. European private credit markets faced distinct pricing headwinds, with cash margins compressing to 5% on average, indicating competitive pressure and lower yield environments in secondary geographies relative to U.S. counterparts.
The most significant trend identified is the continued migration toward larger borrowers and larger check sizes. Nearly two-fifths of 2025 originations targeted companies with minimum $50 million EBITDA thresholds—an acceleration from 35% in 2024. This upmarket movement reflects institutional capital concentration, sponsor preference for lower-touch, less labor-intensive credits, and likely supply-side constraints in sub-$50 million EBITDA segments. Sector concentration remained remarkably stable, with Healthcare/Life Sciences, Manufacturing, Software/Technology, and Business Services collectively accounting for 57% of deal volume, suggesting disciplined focus within institutional private credit allocations.
Leverage metrics reveal measured expansion coupled with preserved debt capacity cushions. Average closing leverage of 5.1x (up from 4.8x) indicates modest multiple expansion, but critical nuance emerges in the debt capacity data: 6.3x average debt capacity leaves 1.2x of undrawn cushion at closing. This structural gap suggests lenders and sponsors are maintaining optionality for future add-on acquisitions or refinancing flexibility rather than fully deploying available capacity at entry—a conservative positioning that may reflect macroeconomic uncertainty or disciplined underwriting standards.
Equity contribution dynamics shifted toward lower sponsor capital injection. Equity as a percentage of total capitalization declined to 46% in 2025 from 47% in 2024, driven specifically by a material reduction in deals featuring equity contributions exceeding 50%. This compression reflects both sponsor capital preservation and lender willingness to structure more levered entry points, though it raises medium-term refinancing risk profiles.
Covenant-lite structures represented 21% of 2025 deals but concentrated overwhelmingly in the upmarket segment (91% of cov-lite deals featured $50mm+ EBITDA borrowers), underscoring the two-tiered credit market: larger, lower-touch credits enjoy structural flexibility while smaller mid-market names retain covenant protections. European private credit markets faced distinct pricing headwinds, with cash margins compressing to 5% on average, indicating competitive pressure and lower yield environments in secondary geographies relative to U.S. counterparts.
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