2024 Leveraged Loan Market Survey

Cautious Optimism Prevails Among Lenders After a Challenging Year

Last year began with deep pessimism about the impacts of high inflation and monetary tightening but ended with many convinced that inflation had been tamed, a recession had been averted and earnings growth was set to resume. Many market participants are already declaring “Mission Accomplished” and anticipating more rate cuts from the Fed than it has signaled it intends to deliver in 2024.

Their ebullience has been seemingly unaffected by escalating and ongoing geopolitical conflicts and tensions. This sanguine view contrasts with that of many notable economists and market observers who believe that the financial markets’ rally has gotten ahead of itself, and that formidable challenges remain before the economy and markets are truly free to run. Respondents to our sixth annual Leveraged Loan Market Survey seem to take the middle ground. While most are more upbeat than a year ago, many express tempered enthusiasm about the year ahead.

Our 2024 lender respondents expressed cautious optimism that the worst effects of the Fed’s tightening cycle are behind us, but they are not yet ready to signal the all-clear. Their responses for the year ahead reflect expectations of a more stable lending environment amid a domestic economy that has refused to buckle under the weight of monetary tightening. Now the economy may be poised for improving growth, as Fed rate hikes appear to be over, barring a resurgence of inflation. However, that does not mean low rates are around the corner.

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