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Chart of the Week
Jul 18, 2025
2 MIN READ

Tariffs shift private credit deals

Private credit deals have moved away from tariff-sensitive sectors and toward defensive areas since Liberation Day in April.
Christopher Bole
Vice President, Financial Writer
VIEW BIO

Private credit deal count by sector: Pre- and post-Liberation Day

Column chart showing the composition of private credit deals to goods-producing companies before and after the tariff announcement was made in early April 2025. The chart shows significant declines in deals to consumer discretionary (-10%) and manufacturing (-11%) borrowers. Non-cyclical, defensive sectors like consumer staples, among others, saw meaningful increases.
Source: KBRA Direct Lending Deals, as of June 30, 2025. Based on share of direct lending deals of goods-producing businesses. “Other” represents healthcare and technology loans.
  • The administration’s recent tariff threats reintroduced uncertainty into global markets, halting the détente that had helped power markets higher since April.
  • Even without additional measures, the average effective tariff rate of 20.6%, the highest since 1910, poses meaningful risks to corporate and consumer activity in the second half of 2025.1
  • The private credit market is well positioned in this environment. Compared to syndicated loans, the asset class offers stronger covenants and greater insulation from potential tariff- driven volatility.
  • Notably, 76% of private credit deals year-to-date have been to service-oriented companies, which are less exposed to global supply chains.2
  • And lenders have adapted. In Q2 2025, deal activity declined sharply compared to activity from 2022–2024 in tariff-sensitive sectors like consumer discretionary (-10%) and manufacturing (-11%), while defensive sectors like consumer staples (+14), among others, saw a meaningful increase.2
  • As trade uncertainty persists, investors may benefit from thoughtful underwriting focused on resilient, non-cyclical sectors that continue to anchor the private credit opportunity set.
contributing authors
Christopher Bole
Vice President, Financial Writer
view bio
Disclosures & Footnotes

1. The Budget Lab, Yale University. As July 14, 2025.

2. KBRA Direct Lending Deals, as of May 31, 2025, latest data available.

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