Vista Equity Partners has shelved plans to refinance nearly $6bn in debt and preferred equity tied to its portfolio company Finastra, as weakening loan market conditions have deterred investor interest.

The refinancing, led by Morgan Stanley and JPMorgan, was designed to replace a $4.8bn private credit loan raised less than two years ago, and return $1bn in preferred equity Vista invested in 2023 to complete the original financing. That capital was secured through a novel structure backed by one of Vista’s own funds during a period of sharp interest rate hikes.

The proposed new structure included a $5.1bn senior term loan and a $1bn junior tranche. While initial pricing offered attractive yields, investor demand declined amid broader financial market volatility. Bankers raised the interest spread on the senior loan to 4.5 percentage points over the benchmark rate, but this failed to drive sufficient demand.

The decision comes as leveraged loan markets experience renewed pressure, with investors reducing exposure to riskier debt instruments. March registered the largest drop in average US leveraged loan bids since October 2023, according to Morningstar data.

Despite the delay, the transaction may be revived should market conditions stabilise. Meanwhile, some market participants anticipate a swing back towards private credit, as institutional investors remain cautious in the face of tightening conditions in syndicated debt markets.

Vista, JPMorgan, and Morgan Stanley declined to comment. Finastra did not respond to requests for comment.