Mid-Year 2026 Credit Market Outlook Survey

What Antares’ borrowers and private equity sponsors are signaling next

In the fifth edition of our bi-annual Credit Outlook Market Survey, we draw on Antares’ deep market coverage to capture perspectives from a diverse group of U.S. middle market borrowers and private equity sponsors. Additionally, learn how middle market operators are using AI and where they’re extracting value.

Borrower Key Takeaways

Earnings growth outlook remains strong

Borrowers are confident in earnings growth. Most expect revenue growth in 2026, with an even stronger outlook for EBITDA growth and margin expansion.

Pricing power holds despite headwinds

Pricing power is holding. Despite sales volume demand cited as the #1 top challenge, more borrowers are implementing price increases, and fewer have identified pricing actions as a top challenge.

AI drives efficiency, not headcount

AI has entered the operating agenda but is not yet a headcount story. While most borrowers identify cost reduction as the area in which AI is delivering the clearest ROI, borrowers are also anticipating headcount to be up (~55%) or flat (~36%) to year-end 2025.

Geopolitical risks rise again

Geopolitical risks reclaimed a top 2 spot on the borrowers’ list of challenges after declining at year-end 2025. Expanding market share, consumer confidence, and tariffs/supply chain were all cited as top challenges by one-third of borrower respondents.
 

“Geopolitical risk and oil price volatility remain important macro considerations. AI is different, creating greater dispersion between winners and losers and placing an even greater premium on disciplined underwriting of borrowers with durable value propositions and sustainable pricing power.”

Tyler Lindblad
Chief Investment Officer

Sponsor Key Takeaways

Deal appetite remains strong

Sponsors remain transaction-ready. While the buy/sell imbalance persists, acquisition appetite is high, and sell-side appetite has meaningfully improved.

Valuation gaps continue to constrain activity

Disparity in buyer and seller valuations and limited quality deal flow continue to constrain activity. Exit activity remains muted, with LP pressure to return capital having abated modestly.

Industrials continue to lead interest

Industrials remain the clear top sector of interest for sponsors – specifically across Engineering & TICC, Fire, Life & Safety, Environmental, A&D, and Infrastructure. Healthcare remains #2, and Financial Services continues to gain momentum.

AI becomes a strategic priority

Sponsors are increasingly leading AI implementation across portfolio companies, and AI disruption has risen sharply to their #2 risk. As with borrowers, geopolitical risk reemerged as sponsors’ top concern, cited by half of respondents.
 

“We expect sponsor-backed deal activity to continue to face headwinds, although we have been seeing an encouraging pickup in our new deal screening activity of late.”

Mike Hynes
Co-Head of Originations

Review Key Survey Highlights

By how much do you anticipate the U.S. economy will grow in the next 12 months?

Key Takeaway

Compared to Year-End ’25, most recent sentiment around the growth of the U.S. economy was more dispersed but generally optimistic with 50% anticipating modest to strong growth (2-3%+).

This is in spite of 41% of borrower respondents also noting Geopolitical Risks as a top challenge.

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What is the likelihood that you’ll buy a new platform portfolio company in 2026?

Key Takeaway

Sponsors’ expectations to buy a company in the next six months are stronger than when they were asked at year-end for the full year of 2026.

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How meaningful is AI deployment across these areas of your company?

Key Takeaway

For borrowers, AI deployment and ROI is most prevalent in cost reduction initiatives; revenue-generating AI use cases remain early-stage. The expected margin impact from AI initiatives is positive but modest: ~68% of borrowers expect AI to lift EBITDA margins, but almost entirely in the 0-5% band; ~29% say AI is merely replacing existing IT spend (margin-neutral). Transformational gains are not yet showing up in the numbers or headcount initiatives, with the majority of borrowers anticipating headcount to be up (~55%) or flat (~36%), with only ~9% anticipating a decline.

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Disclosures

The materials presented herein are proprietary to Antares Capital LP and its affiliates (collectively, “Antares Capital”), are confidential, or subject to licensing agreements, and may not be disclosed to any other party without the prior written consent of Antares Capital.

These materials are being provided solely for informational purposes only and are not intended to be a recommendation or advice of any kind, and shall not be construed to create any fiduciary, advisory or other relationship, or the provision of any investment advice or service. These materials are not, and should not be construed to be, a proposal, a commitment, or a contract to lend, provide any financing, or sell any securities or financial instruments, or an offer to enter into any of the foregoing, and shall not be deemed to obligate Antares Capital in any manner whatsoever.

Antares Capital does not represent or warrant the accuracy, completeness or reliability of any of the information contained herein, either expressly or impliedly, for any particular purpose, and shall have no duty to update or correct any such information. Recipient agrees that it will not rely on the information contained herein, and will conduct its own due diligence. In no event will Antares Capital be liable for any losses or damages arising from or as a result of the use of the information or the materials contained herein. Past performance is not a guarantee of future results.

Any statements involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that such opinions or estimates will be realized. The statements and expressions of opinion contained in this presentation are subject to change without notice and involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon nor should they form the basis of an investment decision.

The materials presented herein may contain information concerning economic trends, performance and market analysis and such information may be based on or derived from information provided by our sponsor or borrower relationships who were not compensated for completing the survey. Antares believes that such information is accurate and that the sources from which it has been obtained are reliable; however, none of Antares nor any of its affiliates or agents can guarantee the accuracy of such information and they have not independently verified and are not responsible for any inaccuracies, omissions and dated information contained in such third-party information or the criteria and assumptions on which such information is based. Certain other information regarding market analysis and conclusions could be based on opinions, criteria or assumptions (including those of Antares) that Antares considers reasonable. Such market analysis and conclusions represent the subjective views or beliefs of Antares.

Expectations and views are as of July 2026, the date of publication, and subject to change without notice.