Q1 opened with cautious optimism, supported by moderating inflation, stable rate expectations, and a rebound in public equity markets. This backdrop fuelled a recovery in M&A activity particularly in North America and we saw a rebound in fundraising with increased momentum in real assets and credit strategies. At the same time, the fund finance market saw a marked uptick in the adoption of term loan sub-line solutions, driven by growing institutional appetite for short-dated, investment-grade exposure.
Against this backdrop, four key themes defined market activity:
- Macro Environment: Sticky inflation and stabilising rates supported early confidence, but U.S. tariff announcements late in Q1 reintroduced volatility.
- Fundraising & Capital Structures: Fundraising reached ~$288bn, with strength in infrastructure and private debt; GPs are leveraging Rated Note Feeders and Single Managed Accounts to access regulated and institutional capital.
- M&A Activity: Global deal value climbed to $950bn—a four-year high—led by North America, though emerging geopolitical risks may slow momentum.
- Subline Pricing & Term Loan Adoption: Subline margins tightened materially over the quarter amid heightened competition, as institutional demand boosted term loan uptake and market diversification.
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