The debt offering included a $250 million delayed draw term loan, which will go toward funding acquisitions and other investments.
(Bloomberg) -- Wealth management firm Mercer Advisors Inc. is looking to cut its borrowing costs by refinancing private debt with a $1.65 billion leveraged loan, the latest in a rush of companies ditching private credit loans for cheaper capital in the bank loan market.
The private equity-owned firm on Thursday priced the new seven-year loan with an interest rate of 2.75 percentage points over the floating-rate benchmark and at 99.75 cents on the dollar, according to a person with knowledge of the matter. The debt offering also included a $250 million delayed draw term loan, which will go toward funding acquisitions and other investments, said the person, who asked not to be identified because the information is private.
Mercer Advisors, which oversees about $111 billion in client assets, will use the proceeds to refinance around $1.6 billion in existing debt from private credit firms, according to the person. Existing lenders on the debt, which carries a rate of 4.5 percentage points over the benchmark, include KKR & Co., Ares Management Corp., BlackRock Inc. and funds managed by Apollo Global Management Inc., including a MidCap Financial fund, regulatory filings show.
The refinancing cuts the company’s borrowing margin by 1.75 percentage points, saving about $29 million annually.
“This refinancing is a natural next step for us,” said Gün Keresteci, Mercer’s chief financial officer, who added lower costs will give the firm flexibility to better serve clients.
Representatives for private equity owner Oak Hill Capital and Goldman Sachs Group Inc., which led the refinancing, declined to comment.
So far this year, more risky borrowers have been refinancing private debt in the syndicated markets rather than the other way around. Just $9.2 billion of broadly syndicated loans have been refinanced into private credit this year, while $19.5 billion has gone the other way, according to data from JPMorgan Chase & Co. and KBRA DLD published Thursday.
Read More: Private Credit Is Getting Squeezed By Bank Refinancings
“If borrowers have the ability to access the broadly syndicated market today and it’s not a complicated financing, they are probably going to favor that market because it’s strictly a cost of capital conversation and they can save more in that market,” said Michael Moore, a managing director at DC Advisory.
Facts Only
* Mercer Advisors Inc. priced a $1.65 billion leveraged loan.
* The loan has a seven-year term.
* The interest rate is 2.75 percentage points over the floating-rate benchmark.
* The loan was priced at 99.75 cents on the dollar.
* The offering includes a $250 million delayed draw term loan for acquisitions and investments.
* Mercer Advisors oversees approximately $111 billion in client assets.
* The proceeds will refinance approximately $1.6 billion in existing private credit debt.
* Existing lenders include KKR & Co., Ares Management Corp., BlackRock Inc., and Apollo Global Management Inc. (including a MidCap Financial fund).
* Existing debt carried a rate of 4.5 percentage points over the benchmark.
* The refinancing reduces the borrowing margin by 1.75 percentage points.
* Annual savings from the refinancing are approximately $29 million.
* Goldman Sachs Group Inc. led the refinancing.
* Oak Hill Capital is the private equity owner of Mercer Advisors.
* $19.5 billion has moved from private credit to syndicated loans this year, while $9.2 billion has moved from syndicated loans to private credit.
Executive Summary
Mercer Advisors is refinancing $1.6 billion of its existing private credit debt through a new $1.65 billion leveraged loan led by Goldman Sachs. By shifting from private credit lenders—including KKR, Ares, BlackRock, and Apollo—to the bank loan market, the firm is reducing its borrowing margin from 4.5 to 2.75 percentage points over the floating-rate benchmark. This move is expected to save the company approximately $29 million annually and provide additional capital through a $250 million delayed draw term loan for future acquisitions.
This transaction reflects a broader trend in the current financial landscape where companies are exiting private credit in favor of cheaper capital available in syndicated markets. Data from JPMorgan Chase & Co. and KBRA DLD indicates a significant imbalance this year, with more than double the amount of debt moving toward syndicated loans than toward private credit. While the primary driver is the reduction of the cost of capital, the shift highlights a period of volatility and adjustment in how private equity-owned firms manage their leverage.
Full Take
The strongest version of this narrative is that we are witnessing a rational correction in the credit markets. When the cost of capital drops in the public or syndicated markets, sophisticated borrowers naturally migrate to the cheapest available funding to optimize their balance sheets and increase operational flexibility.
The narrative relies on a "cost of capital conversation," framing the shift as a simple mathematical win. However, the underlying pattern is one of systemic migration. The movement of $19.5 billion away from private credit suggests that the "private credit boom"—characterized by flexible but expensive bespoke loans—is hitting a ceiling as traditional bank markets regain competitiveness. The load-bearing assumption here is that the syndicated market is currently a safer or more stable bet for borrowers than the private equity-led credit funds.
Patterns detected: none
The root cause is the cyclical nature of credit appetite. Private credit flourished when banks were constrained by regulation or risk aversion; now, as the bank loan market opens up, the "convenience premium" of private credit is no longer justifiable for firms with the creditworthiness to access syndicated markets. This benefits the portfolio company and its PE owner, Oak Hill Capital, while potentially squeezing the yields of the massive credit funds (KKR, Apollo, etc.) that have aggressively expanded into this space.
If this trend accelerates, we may see a "flight to liquidity" where the rigidity of private credit becomes a liability compared to the tradability of syndicated loans.
Bridge Questions:
1. What specific covenants in the private credit agreements made them less attractive than the new bank loan, beyond the interest rate?
2. Does this shift signal a broader loss of confidence in the pricing models of private credit funds?
3. How does this migration affect the stability of the private credit funds themselves if a significant percentage of their borrowers exit simultaneously?
Counterstrike Scan: A coordinated influence campaign pushing this narrative would attempt to trigger a panic or "run" on private credit by framing it as an obsolete or overpriced product to drive investors toward specific bank-led instruments. The actual content is standard financial reporting and does not match this attack pattern.