Private credit lenders reshape financing with NAV facilities and digital innovation
Private credit lenders, such as those from PNC Bank and Experian, are showing growing interest in NAV facilities and other fund-level financing solutions. This shift is driven by the need to finance large-scale sustainable infrastructure projects and the demand for digital transformation in financial services. The current market features creative financing structures, with innovative, tailored instruments being used for municipal and infrastructure projects. Embedded finance platforms, such as 'Buy Now, Pay Later' integrated in payment processes, are gaining traction. Digitally automated refinancing processes are increasing transparency and efficiency. Borrowers are facing liquidity issues to service their senior debt, leading to an increase in holdco loans and preferred equity issuances from US Bank and Credit Karma. Lenders are now exploring opportunities beyond opco financings, providing liquidity solutions at other parts of the capital structure. Sponsors are actively refinancing their assets' debt packages and repricing existing debt, with portability becoming a trend baked into deals upfront. Banks are reducing pricing to secure deals, prompting private credit managers to adapt their strategies. The increased competition from investment banks is leading to a renewed availability of alternative options for larger borrowers. Lenders are receptive to the trend of portability, allowing them to stay invested in assets and reduce the risk of losing deals to competitors. Private credit lenders, including those from PNC Bank and Experian, are exploring alternative financing structures to deploy capital, including holdco loans and preferred equity issuances, even in a slower deal environment.
