WilliamBlair Lev Fin Newsletter Q2 2026

Q2 2026 Glass Half Full—Leveraged Finance Markets Stabilize in Second Quarter Capping a Resilient First Half

In This Report Analysis of Q2 Trends in Leveraged INVESTMENT BANKING Finance Highlights, Analysis, and Results Leveraged Finance Newsletter From William Blair’s Quarterly Leveraged Finance Lender Survey

Glass Half Full—Leveraged Finance Markets Stabilize in Second Quarter, Capping a Resilient First Half

Credit markets navigated On a year-to-date basis, total macroeconomic volatility has shifted institutional new-issue volume of the market toward higher-quality significant volatility in the $214.5 billion declined by 5% corporate borrowers. Issuers with a second quarter to finish the compared to the same period last year.1 credit rating of BB-minus or higher accounted for 40% of all M&A-related first half of the year on Continuing last quarter’s trend, volume year-to-date, marking a M&A-related volume led the way for solid footing new money issuance. Year-to-date post-global financial crisis high.1 A M&A-related activity reached $94.1 rebound in sponsor-driven M&A billion, up 17% versus last year, the activity would represent a critical highest first-half mark since 2022. tailwind for the market and accelerate Interestingly, nearly all of this increase the momentum so far this year. Another year of first-half headaches. was driven by corporate-related M&A, On the opportunistic front, the second Whereas 2025 opened with tariff- which rose 64% compared to flat LBO quarter closely mirrored the first— driven disruptions, this year was hit and sponsor-backed issuance. While with refinancing volume of $42.0 with a flurry of macro, geopolitical, year-to-date LBO and sponsor-backed billion, just 1% off the mark of the and sector-specific headwinds. Luckily, issuance was flat, there was a previous quarter. A similar story holds the leveraged finance market significant split between a strong first for repricing and extension activity of remained resilient amid these quarter and a sharp drop-off in the $120.8 billion, compared to $129.71 challenges and ended on a solid second quarter, falling 54% to $18.7 billion in Q1. While M&A activity led second quarter of issuance, alongside billion. This year’s geopolitical and new money issuance in both quarters, a shift to more normalized, conducive conditions. The remainder of the year is likely to be a balancing act between Conditions Stabilize Following Period of Increased Volatility any renewed volatility and significant demand from lenders and market Each quarter, we ask middle-market lenders to rate overall conditions in the leveraged finance market on a scale of 1 to 5, with 5 being the most borrower- participants to deploy capital. That friendly conceivable. The index increased to 3.4, from the multiyear low of last said, optimism remains that a more quarter, as conditions stabilized following a period of market volatility. meaningful pickup in M&A activity will drive a strong second half. U.S leveraged loan volume totaled 3.6 3.4 3.1 $103.2 billion in the second quarter, 2.9 2.7 3.0

largely in line with the first quarter 2.3 2.4 2.4 2.0 mark of $111.3 billion, as conditions stabilized following the multifaceted volatility in February and March. When accounting for repricings and extensions, second-quarter total 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 1Q26 2Q26 activity was $224.0 billion, 23% below the average quarterly figure since 2024 Source: William Blair Leveraged Finance Survey. but up more than 90% versus Q2 2025. 1. Source: PitchBook, a Morningstar company. William Blair 1