The drug manufacturer replaced a $4.2 billion direct-lender loan with bank-led financing that is expected to cut its interest bill by about $100 million a year. FDH Aero made a similar move in July.
Some of private credit's largest borrowers are finding cheaper money elsewhere.
Catalent, the drug manufacturer acquired by Novo Holdings, has refinanced a $4.2 billion term loan from direct lenders with broadly syndicated bank financing. The new package consists of a seven-year Term Loan B of about $4.1 billion equivalent and a $600 million revolving credit facility, for a total of about $4.7 billion. The transaction was completed on Sept. 1.
The original direct-lender loan was put in place in 2024 to back Novo Holdings' acquisition of Catalent. The refinancing is expected to reduce Catalent's annual interest expense by about $100 million.
Catalent is not the only case. Bain Capital-owned FDH Aero refinanced debt previously provided by direct lenders with a $1.1 billion term loan in July. Mercer Advisors made a similar move earlier.
Savings of about $100 million a year are equivalent to roughly 2.4 percentage points of interest on the $4.2 billion of debt Catalent replaced.
For private credit funds, the pattern raises a portfolio question. Credit analysts have described an adverse-selection dynamic in which the strongest borrowers refinance out first. If that holds, the credits left behind in direct-lending portfolios may skew toward companies with fewer alternatives. That would not show up in any single deal. It could show up over time in the mix of borrowers that remain.
Credit pressure is rising inside BDC portfolios, with the number of stressed borrowers up 25% since the end of 2025 and stressed first-lien loan volume nearly doubling to $47 billion. Refinancings like Catalent's remove performing loans from direct-lending portfolios.
Whether refinancing out becomes a broad trend will depend on how many other large sponsor-backed borrowers follow Catalent and FDH Aero into the syndicated market over the next several quarters, and on whether bank lenders keep offering pricing that makes the switch worth it.