Mezzanine Market โ Selective Opportunities in a Contracting Cycle
As monthly issuance contracts, buyers have more leverage on put-option, refixing, and workout terms โ creating a more protective contracting environment.
Overview
Issuance contraction is reframing the negotiation position for mezzanine buyers. Put-options, refixing, and workout clauses are being strengthened, creating opportunities to lock in more protective covenants than the prior cycle allowed.
Issuance trend
Monthly issuance volume has stepped down meaningfully through Q1 2026, with deal count holding but size compressing.
Covenant strengthening
Refixing thresholds, put-option triggers, and workout standstills are migrating in the buyer-friendly direction.
Selection criteria
Sponsor quality, refinancing horizon, and ratings buffer remain the primary screens.
Portfolio construction
A concentrated portfolio of selective opportunities outperforms broad participation in this cycle.