Weekly Debt Capital Markets Digest
News
Articles I found interesting. Doesn’t mean I agree with their takes.
Public BDCs rebounded from lows as Q2 results showed stabilization and improvement. The piece summarizes calls from ARCC, BXSL, TCPC, OBDC, GSBD, FSK, OCSL, MFIC, MSDL, TSLX, and CGBD (Bloomberg)
Ares scaled back its €1B private credit CV to €400m after investors demanded deeper discounts on the loans than Ares was willing to accept (Financial Times)
BlackRock TCP sold a 95% interest in a CV to Pantheon for $152m, which, after debt repayment, will reduce its leverage from 1.38x to 0.3x. The CV includes 80 middle-market loans totaling $523m (WSJ)
Two Blue Owl BDCs reported improved results, with OBDC posting higher NII and its lowest leverage in two years, though non-accruals rose from 2% to 2.8% QoQ. The BDCs also repurchased $90m of shares (Bloomberg)
PIK loans grew from 6% to 10% of BDC portfolios over the past four years, suggesting growing pressure on borrowers’ cash flow (Semaphor)
Google’s $200B AI infrastructure machine: Google guarantees data centers, Broadcom supplies and helps finance chips, while Apollo and Blackstone fund hardware leased to Anthropic (Financial Times)
AI data center CMBS spreads widened over the past 12 months, with AAA up 15bps to 168bps and BBB- up 11bps to 321bps, as heavy AI debt supply drives investor fatigue (Bloomberg)
Deutsche Bank froze Radiant World’s bank accounts, while Arab Bank and ICBC suspended financing amid concerns that the company had provided banks with falsified documents related to iron ore trades (Bloomberg)
Jefferies discovered fake invoices among those backing its financing to Sapphire Minmetals. Sapphire was owned by Radiant World until 2015 (Bloomberg)
U.S. insurers hold $40B of debt privately graded by Egan-Jones, a rating agency sued by former employees who allege they were pressured to inflate ratings (WSJ)
EchoStar’s Hughes Satellite filed for Chapter 11 after lacking the cash to repay $1.5B of bonds due August 1, as competition from SpaceX’s Starlink and Amazon Leo drove a 22% YoY drop in broadband subscribers (WSJ)
Recovery rates for first-lien lenders in bankruptcy have declined dramatically, driven by shrinking junior tranches, collateral increasingly dominated by IP, LMEs, and other factors. See Chart of the Week (Bloomberg)
“Sell America” trade re-emerges as investors fear the Fed is losing its grip on debt markets without an inflation strategy. 30Y yields topped 5%, the highest since 2007, while the USD weakened against G10 currencies (Bloomberg)
$100B of bonds in the USD and EUR IG indexes are trading at spreads close to junk-bond levels, including Oracle and Stellantis. Potential “fallen angels” (IG downgraded to junk) also include BDCs exposed to SaaS (Bloomberg)
European green bond sales hit a record $242B in 1H26, on track to surpass the $385B full-year record set in 2024, as the Middle East conflict revived interest in energy security and infrastructure investment (Financial Times)
European loan refinancing accelerated in the second half of the year, defying expectations, as borrowers moved to get ahead of the 2028 maturity wall (Yahoo Finance)
Citi-led African sovereign bond sales are up 70% YoY despite the Middle East conflict, with Citi leading every deal but one (Angola’s $1.5B raise), totaling $6.2B vs. $7.3B for all of 2025 (Bloomberg)
A record $8.8B of PE, VC, and Private Credit capital has flowed into Emerging Markets YTD to fund AI data center buildouts (Bloomberg)
France and the UK will help Zimbabwe restructure its $21B debt to the IMF, World Bank, AfDB and Paris Club, aiming to restore capital-markets access after being locked out since 1999 (Bloomberg)
Transactions
Jane Street is seeking $15B of private debt to refinance $11B of bonds, giving it more investment flexibility while avoiding quarterly financial disclosures required for public bonds (Bloomberg)
Ares is leading a $2.2B private debt package to finance MedImpact’s acquisition of Medical Card Systems, one of the largest direct loans this year. The second-lien loan is expected to price at SOFR+8.0% (Bloomberg)
HPS minority-owned Authentic Brands participated in Aston Martin’s recent £550m loan. Of that, £100m is a DDTL available if Aston transfers 50.1% of its non-automotive IP to Authentic (Bloomberg)
Alphabet sold $25B of AI-related IG bonds across 10 tranches, with maturities from 2 to 40 years. The yield premium was 1.3% over Treasuries, tighter than the initial 1.55% talk (Bloomberg)
Blackstone is pitching investors on a second $36B debt package tied to Anthropic’s use of Google’s TPU chips. The first deal was a $35B package arranged by Blackstone and Apollo (Yahoo Finance)
Kazakhstan plans to raise ¥3.4B ($500m) in Panda bonds, taking advantage of lower rates in Chinese capital markets. It will be the second ¥3.4B tranche, following a 3-year, 1.90% Panda issued earlier this year (Bloomberg)
Laos state-owned power producer EDL-Generation issued $300m of five-year, 11.125% dollar-denominated junk bonds (CCC) to refinance existing notes, a rare deal in Asia’s dollar bond market (Bloomberg)
Chart(s) of the Week
Recovery rates are plummeting, with more first-lien lenders recovering next to nothing in bankruptcy.
The carry trade — the strategy of borrowing in yen and parking in a higher-yielding currency like the Mexican peso — has been an ultra-reliable source of profits. Over five years, it has strongly beaten even the S&P 500’s total return.
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