Recent developments in leveraged finance deals have been disrupted, prompting concerns that banks may end up holding onto debt intended for acquisitions. President Donald Trump's announcement of steep tariffs last week has fueled worries of a possible recession, causing stock prices to plummet. This has led to delays in financing for a Canadian auto-parts manufacturer and H.I.G. Capital's bid for a Canadian software provider, posing risks for lender groups as the impact spreads through leveraged finance markets.

The uncertainty in the market has put a hold on new risk being presented to investors. Lenders on Wall Street typically aim to offload credit committed for acquisitions before they close. However, they face the risk of being stuck with "hung" debt if they are unable to sell underwritten loans off their balance sheets in time. For example, Citigroup Inc. and JPMorgan Chase & Co. have an April deadline to finalize ABC Technologies Holdings Inc.'s acquisition of TI Fluid Systems Plc, but a failed $900 million leveraged loan sale and a delayed $1.325 billion junk bond sale are causing concerns. There are also challenges in funding H.I.G.'s purchase of Converge Technology Solutions, with insufficient investor support for a loan sale. The struggle in the credit market is evident with difficulties in refinancing debt for CEC Entertainment and Finastra Group Holdings Ltd., along with a halt in new issuance of junk debt in the US.

The sentiment among industry experts, like Kelly Burton from Barings and Jeremy Burton from PineBridge Investments, is to exercise caution and avoid committing new capital amid the current market uncertainty.