30 years of growth: Insights from J.P. Morgan's Global Leveraged Finance Conference

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Amaury Guzman: Hello, and welcome to What's the Deal? on J.P. Morgan's Making Sense podcast. I'm your host, Amaury Guzman from the Leveraged Finance desk. I am joined today by returning guest, Kevin Foley, our global head of Capital Markets, and we're both fresh off the plane from Miami where we hosted our annual Global Leverage Finance Conference. Kevin, welcome back.

Kevin Foley: Thank you. A little cooler in New York than Miami, but always good to get back to New York.

Amaury Guzman: (laughs) Certainly, certainly, Kevin, and we're still reeling with all the excitement that we lived down in Miami. We hosted over 3,000 attendees, had over 131 companies presenting to investors and lenders alike, received over 14,000 requests for one-on-one meetings. After three days of talking to clients, investors, colleagues, and alumni, what do you feel the sentiment to have been like down in Miami?

Kevin Foley: Well, it was a great event and what was exciting about this year, we celebrated our 30th anniversary of the Global Leverage Finance Conference, and when you look back 30 years ago, it was a hundred-person event. We probably had less than 30 companies. As you mentioned, 131 presenting, and then we had another 120, 130 others that were additionally doing one-on-ones. So it's tremendous to see the growth that this event has had over the years and the investment that's gone into it from our standpoint. One of the stats that I also like to throw out there is about the market growth itself. So in 1995, you had a $350-billion market across high-yield bond and leverage loans. Today, they're each a $2-trillion market, and then you add on the direct lending market at 2-trillion, you've got a combined 6-trillion credit market from what was at 350-billion 30 years ago. So not only does it show up in the attendees and the ecosystem that is created in Miami with our event, but also just seeing the massive growth in the market.

Amaury Guzman: Now, Kevin, just digging into subject matter of what was discussed down at the conference, what's your take on where the thoughts of the market are at the moment?

Kevin Foley: So in speaking with investors and lenders, I'd put it in the category of cautiously optimistic. There is definitely bullishness around the pro-business agenda that's coming outta Washington, continue to see a robust economy in North America, earnings from the fourth quarter came in well. I think what they were hearing outta generally from management teams there of business trends continuing. Where the caution will come in is a lot of the discussions around tariffs. We continue to wake up each day with a bit of news around what's on the tariff front. And I think the biggest challenge that, and even you hear this from management teams too, is you don't know where, you don't know how much, you don't know what industries, and while everyone is optimistic that it's gonna end up in a good spot, there's a lack of clarity around it. And so investors and lenders are assuming we end up in a good spot because perhaps it's negotiating tactics, perhaps they'll be used wisely if they are used, and that the economy can be resilient with whatever that may create. Because there is concern they could be inflationary. Does it trigger a trade war when you also still have inflation hanging in the balance, right? It continues to be sticky around 3%. We haven't got down to the Fed's target, 2%. That is gonna still hang in the balance for some time here. Market mostly is taking a optimistic view on that stuff. I'd say a large part of that has to do with the technical picture. You still have a lot of liquidity moving around the system and that is kinda driving and carrying the day. And in fact, you've got a lessening of regulation expected outta Washington as viewed as a positive development and that it's gonna be able to drive and overcome some of these other challenges.

Amaury Guzman: Thank you for that. It feels like investors and lenders are giving the benefit of the doubt, at least for the time being, expecting a benign outcome for now. I would like to pivot to M&A activity. It feels like animal spirits are certainly alive and that the art of the possible is certainly back on the table. How do you feel about the market's ability to price new risk to finance the upcoming M&A pipeline?

Kevin Foley: Yeah, I definitely subscribe to the animal spirits being very much alive. When you look back to post-election, the chatter picked up very quickly, and I think if I look back to 2024, one of probably the more positive surprises was the momentum that came out of post-the-election in November of activity and dialogue around potential M&A that we saw into the end of the year. As it came into January, it felt like it, those talks had, were not quite the same momentum when we started the year, but I'd say over the past five weeks, the dialogue around that has really picked up. And what we're seeing in terms of financing requests related to M&A is some of the busier levels we've seen in several years. There was nothing that I heard in Miami that would change that view, and in fact, a number of situations I always said, "Okay, yeah, it continues to be a driving factor for 2025." I do have caution around some of the uncertainties that we've talked about and where tariffs and other things may come into play. Does that slow down that trend? So far, we're not seeing it. We see the confidence still being there, certainly the financing markets are there, but it's something we're watching very closely to see if the trends continue.

Amaury Guzman: I would absolutely agree with that, Kevin. Based on the discussions that you had with both lenders and investors and clients over the last couple of days, what do you think will be the items that they'll keep an eye on to drive forward their strategy for the rest of the year?

Kevin Foley: Tariff discussions, inflation data, health of the consumer, and then just overall earnings performance of companies. When you look at what are potential pressures that some are concerned about, potential labor pressures picking up, does some of the discussion around tariffs have some disruption, supply chains, and just the overall robustness, but really looking at those metrics to see where things will trend over time.

Amaury Guzman: That certainly makes a lot of sense and I'm sure that folks will keep an eye on that as well as they navigate their own strategies. Now, Kevin, at the conference, J.P. Morgan announced that it's increasing its commitment to direct lending and allocating $50-billion from our own balance sheet. We've already deployed north of $10-billion across more than a hundred deals, and we will continue to have our strategic co-lender partners accompany us on this next stage. As we take this next step forward in the market, it feels like increasing our commitment only highlights our approach to being solutions-based as well as product-agnostic in our advice. What can clients expect from J.P. Morgan on this front?

Kevin Foley: First, we are very excited about the announcement of the $50-billion commitment, but we also like to point out to our clients that we've been in the direct lending business since 1799 when the Bank of the Manhattan Company was founded. So while we have made this announcement, (laughs) we do think it's been a long time in making direct loans. But we are excited because the market has evolved, and as we've evolved our business over the years, this is just another turn on that evolution. So we recognize the competitive landscape has changed and the needs of our clients have changed and the way markets operate have changed. And so our goal is always to evolve with those changes over time, and I think that's just the latest in that evolution. Or as you said, our goal is to be product-agnostic. We wanna be able to give our clients the most objective advice and really be in the financing solutions business, as you point out. We wanna be able to walk into our clients and say, "Here's a broadly syndicated loan, here's a direct loan, here's a high-yield bond. Maybe even a convert could make sense." We, at the end of the day, don't care. What we do care about is that our clients get the most effective capital structure for their needs, and those are gonna change over time, over the life cycle of the company. So for example, we've got 80,000 global clients. 32,000 of those are middle market clients. Perhaps in an earlier stage of their life cycle, a direct loan's gonna make more sense given the size, but as that company grows, maybe it's gonna go into the broadly syndicated or high-yield market, maybe eventually it becomes a public company and then converts are gonna be an option. So we wanna be there at all stages of life for our clients and be able to fit all their needs. There's also what we're not talking about is the fact that why do our clients want us in the direct lending business? There's benefits to that market and we think that market's here to stay. But those clients also, what we've heard from them is saying they want us bigger in the direct lending business because there's so many other things, whether it's payments, cash management and treasury services, FX and hedging, those things that they get from us as well. They wanna be able to come to the biggest and broadest platform called J.P. Morgan and be able to get all of those solutions from us.

Amaury Guzman: No, that's certainly clear. I think that the value is really there and very visible, being a one-stop shop for our clients, for investors and lenders, the buy and the sell side alike, and being able to speak to the whole life cycle and accompany them across financing solutions as they grow and as they evaluate a strategic matters as well. Kevin, any final thoughts or actionable insights that you have as takeaways from the conference?

Kevin Foley: Well, first, thank you for all our clients that participated. We always like to remind you all that we don't take for granted the trust and partnership you place in J.P. Morgan and the franchise that we built every day that we're in the markets to, when we're celebrating a 30th anniversary, like the Global Leverage Finance Conference this year, it's all because of that partnership and trust you place in us. So we're as only as good as our partners. So thank you for all that support. I also wanna thank the J.P. Morgan team who did an amazing job as always making the event a success. As we look forward, there's a lot to be watching, as we've talked about, from the tariff discussions to the resiliency of the economy. Does M&A pick up the way we expect it? I think 2025 is going to shape up to be a very interesting year. What we're telling our issuer and borrower clients is that there's a good backdrop right now to take advantage of issuing in the markets and something they should be looking at very closely because there's a lot of things out there could change, it could change quickly. So we look forward to continuing to work with all those clients, we look forward to continuing the partnership with the buy side, and again, we thank you for all of that.

Amaury Guzman: We also look forward to meeting with everyone again at our EMEA Leveraged Finance Conference in London. That'll be happening later this year from the 3rd to the 5th of September. So to all our listeners, please stay tuned for more updates on that front. And thank you for you, Kevin, for sharing your thoughts and your key takeaways from the conference as well as for leading such a successful event this year.

Kevin Foley: No, thank you, Amaury, and look forward to seeing everyone in London in September.

Amaury Guzman: And thank you to our listeners for tuning in. Stay tuned for more episodes of What's the Deal? on J.P. Morgan's Making Sense podcast.

Voiceover: Thanks for listening to What's the Deal? If you've enjoyed this conversation, we hope you'll review, rate, and subscribe to J.P. Morgan's Making Sense to stay on top of the latest industry news and trends, available on Apple Podcasts, Spotify, and YouTube. To stay ahead of the curve, sign up for J.P. Morgan's In-Context newsletter, packed full of market views and expert insights delivered straight to you. To subscribe, just visit jpmorgan.com/in-context. This material was prepared by the investment banking group of J.P. Morgan Securities LLC and not the firm's research department. It is for informational purposes only and is not intended as an offer or solicitation for the purchase sale or tender of any financial instrument. © 2025 JPMorgan Chase & Company. All rights reserved.

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