Carlyle expects more amend-and-extends ahead of the 2028 wall

Carlyle expects a new wave of amend-and-extend transactions in the second half. Managers will push maturities past the 2028 wall, Creditflux reported Monday in an exclusive story.

Amend-and-extend is the credit agreement's version of a postponement. The borrower and its lenders rewrite the existing facility, moving the maturity date out in exchange for a fee, a spread step-up, or both. The loan stays where it is; the ending moves.

The 2028 maturity wall is the concentration of loans and bonds scheduled to come due that year. Halfway through 2026, that wall is a little more than a year away. In credit, that is close enough to start shaping exits. Managers are acting before the queue forms, in Carlyle's view.

Creditflux's report names no credits and no terms. It says simply that as the wall gets closer, the queue gets longer.

The forecast arrives when new deals are scarce. Private Credit Daily has reported US direct lending volume running below half its first-quarter pace; it has also reported that Palmer Square is exploring a sale. BlackRock TCP Capital has sold nearly half its BDC portfolio into a continuation vehicle. A lender has two ways to make its book work: sell what it has, or extend what it has. The first realizes a price; the second changes a date.

Carlyle's forecast implies that managers expect 2027 to be a slow year for refinancings, not a busy one. If the refinancing market were open, the rational move would be to issue new paper, not rewrite old agreements.

Amend-and-extend also answers a mark-to-market problem. Rather than let a loan price at today's wider spreads and force a fresh valuation, a lender can negotiate a step-up inside the existing agreement. The new price is agreed between two parties instead of discovered in the market.

The cost shows up later for a direct lender. Principal that should return at maturity stays locked in the credit, duration extends, and the portfolio's cash flow is pushed into a future period. For a BDC, the trade preserves current income but denies the manager the repayment that would recycle into new loans. That is a real constraint if the BDC's own shares trade at a discount to book. For a CLO, an extended asset changes the timing of the principal payments noteholders were promised. The spread step-up and the extension fee compensate for some of that. They do not compensate for the lost flexibility.

None of this makes amend-and-extend a distress trade by definition. Sponsors often prefer it when a refinancing would force a valuation mark or a fresh equity check, and lenders with performing assets are glad to keep them. Watch the length of the extension and the size of the step-up. A one-year extension with a modest fee is a market waiting for the chance to refinance. A two-year extension with a meaningful step-up is a market expecting the wall to hold.

For limited partners in direct lending funds, the likely effect is delayed distributions. A fund that would have returned principal is now returning income; capital works longer; assumptions about fund life stretch. That conversation sits on the 2027 calendar next to the wall itself.

The forecast describes a market that is neither refinancing cleanly nor defaulting: a queue of credits asking for more time. Those loans will still mature, later and at a higher price. The extra time either repairs the credit or it doesn't; the fee is paid either way.