CR TrendLines Topical Report: More Lender-Friendly Flex in March Pushed BSL Spreads Wider and Terms Tighter
Steve Miller: Executive - Covenant Review
23 March 2026
- How lender friendly flex dynamics in March reshaped clearing spreads and tightened documentation across the BSL primary market.
- What shifting supply demand conditions reveal about investor risk appetite and deal execution outcomes.
- Why more lender friendly flex in March pushed BSL spreads wider and terms tighter despite strong CLO formation.
- How covenant protections evolved as flex activity increasingly favored lenders across sponsored transactions.
- Where relative value signals are emerging across rating tiers amid bifurcated primary and secondary markets.
In March, BSL average bids stabilized on average, bolstered by a modest advance in Software names from their February lows. All told, the average bid of the JP Morgan BSL Index ticked up 0.14 point to 94.95 on March 20 from 95.09 on Feb. 28. Still, the average Index bid is down 1.60 points YTD and stands at the lower end of the post-Covid-19 range of 92.01-98.95, reflecting investor caution across risky assets.
In the new-issue market, conditions weakened further in March. Three stats illustrate the point:
• The average single B clearing spread gapped out to a 29-month high of S+470 (S+401/97.9) MTD.
• Repricing volume dried up completely MTD; April 2025 was the last month with no such activity.
• Upward flexes are running slightly ahead of downward flexes MTD—the last time the flex ratio was upsidedown
was March 2023.
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