The syndicated asset-based lending market finished 2025 with the third-highest total ever recorded by LSEG Data & Analytics. This result is even more impressive after taking into the account the significant level of LIBOR cessation amendments in the two higher years. Volume for the year was driven by a significant level of refinancing activity as borrowers addressed upcoming maturities, and also a number of high-profile M&A driven financings. As we enter 2026, the outlook is for a continuation of the same activity, as significant refinancing activity and limited M&A, combined with strong bank appetite for new loans, fuels an aggressive and accommodating market.

ABL Volume Rises, Driven by Refinancings

Syndicated ABL volume surged to $31.1 billion in Q4 2025, marking a 41% year-over-year increase and capping off a $147.3 billion year, the third highest on record. The two higher totals, in 2022 and 2023, were inflated by a substantial level of activity related to LIBOR replacement language, which accentuates the strength of the 2025 results.  The SFNet Quarterly ABL Survey, which includes both syndicated and non-syndicated transactions, reinforces this momentum. Commitment volumes were solid, with client utilization in Q4 remaining consistent with the prior few quarters.This utilization level is lower than prior years, reflecting significant capital markets issuance during the year as borrowers who had access to broader capital markets took advantage of strong bond and TLB markets to term out their fundings. Refinancings dominated the landscape, totaling $109 billion in 2025, up 29% from 2024. New money issuance reached $38.3 billion, an 83% increase year-over-year, further illustrating lenders' appetite for quality credits. This new money activity was a combination of selective M&A-related transactions and also upsizings as many borrowers upsized existing facilities to take full advantage of higher working-capital levels.

Corporate vs. Sponsored

Corporate borrowers continued to lean into ABL, raising $28.3 billion in Q4 2025. Of this, $6.9 billion was new money, a 60% YoY increase and the strongest fourth quarter ever recorded for corporate-originated ABL. For the full year, corporate issuers raised $92.8 billion, the third-highest total historically.

By contrast, sponsor-backed activity retreated in Q4, contributing just $2.9 billion, the lowest level since Q3 2020. While 2025's total sponsored ABL reached $54.5 billion (a 64% YoY gain), the quarterly dip reflects a broader slowdown in M&A-driven issuance and longer hold periods among private equity funds.

Retail, Wholesale, and Manufacturing Lead the Pack

Retail and supermarket borrowers led 2025 ABL issuance with $31.8 billion, followed by wholesale ($26.4 billion) and manufacturing ($21.3 billion). Combined, these sectors accounted for more than half of all volume, underscoring ABL's continued relevance in asset-heavy, inventory-reliant industries.

The year also saw 46 deals of at least $1 billion in size, and 31% of transactions exceeded $500 million, up from 29.5% in 2024. Average deal size climbed to $558 million, pointing to greater structural efficiency and a continued "flight to scale" among top-tier arrangers.

Loan Purpose & Tenor

General corporate purposes accounted for 82% of total issuance. M&A-related deals represented 14% ($21.2 billion), while DIP and exit financing comprised the remaining $6.2 billion. Five-year tenors continued to dominate, making up 79% of Q4 2025 volume despite a slight decline from 89% in the prior quarter.

Inflation Easing, but Risks Linger

The macroeconomic environment added further complexity. While inflation eased from its 2024 peaks, it remained sticky in services. The Federal Reserve maintained a cautious stance, with no rate cuts in Q4 despite market expectations.

Tariff impacts remain front-of-mind. While frontloading of imports boosted Q2 and Q3 activity, the full effects on supply chains and cost structures are still unfolding. The Senior Loan Officer Opinion Survey (SLOOS) for Q4 2025 showed modest tightening in commercial credit standards, particularly for borrowers in manufacturing and retail, two of ABL's core constituencies.

Outlook

Looking ahead, expectations are cautiously optimistic. Lenders remain open for business, and there is still a significant level of refinancing activity expected in 2026 to address upcoming maturities.  In the aftermath of several significant frauds in the broader market, deals are getting done, but often after more diligence and tighter structural terms.

The continued strength in refinancing and general-purpose issuance suggests that ABL will remain a key liquidity solution amid global economic uncertainty. However, the falloff in sponsor-driven transactions may persist until M&A rebounds more fully.

We are entering an age where fundamentals, structure, and credit discipline will define the winners. ABL is well-positioned, but it must evolve with the market.

In short: 2025 closed strong, and the outlook for 2026 is for continued strength despite economic and geopolitical uncertainty.

ChatGPT was utilized in the creation of this content.