Debt Issuance by Non-Bank Financial Institutions Surges in 2024; 2025 Issuance Expected to Remain Healthy

This commentary reviews the 2024 debt issuance activity of Non-Bank Financial Institutions (NBFIs) followed by Morningstar DBRS.

Key highlights include:
-- NBFI debt issuance volumes surged in 2024 with the more than 100 NBFIs followed by Morningstar DBRS having issued nearly $159 billion in senior unsecured debt, a 33% YoY increase.
-- With the substantial growth in private direct lending, business development companies (BDCs) that we track, were extremely active with approximately $19.8 billion in issuance, nearly triple 2023 volumes. BDCs accounted for 12% of all NBFI debt issuance in 2024, up from just 2% in 2016.
-- Corporate debt issuance by monoline credit card issuers declined YoY for the second consecutive year despite healthy consumer spending on credit cards. Issuance totalled $9.95 billion, down 15% from 2023.

"Despite the noteworthy softness in Q4 2024 issuance, we expect senior debt issuance in 2025 for the NBFIs we follow to remain at healthy levels but likely modestly lower than seen in 2024," said David Laterza, Associate Managing Director -- NA Financial Institution Ratings, Morningstar DBRS.