"Big, Beautiful Bills" have "Big, Beautiful Consequences" on capital markets transactions…

In a sign of just how fast the market reacts to regulatory risk, the first public credit agreements to address Section 899 of the One Big Beautiful Bill Act are already here. The message is loud and clear: borrowers will foot the bill.

What’s Section 899?

Section 899 of the One Big Beautiful Bill Act, a sweeping tax and international trade bill pending in Congress, proposes what the media is calling “revenge taxes” on interest and other payments to lenders in “discriminatory tax jurisdictions”. These jurisdictions include lenders from big players in the US syndicated credit market: France, Germany, the UK, Canada, and Japan, to name a few.

The proposal would raise U.S. withholding taxes on payments made by U.S. borrowers—such as loan interest and dividends—to affected foreign lenders by 5 percentage points annually, up to a total increase of 15 percentage points. This would substantially increase the after-tax cost of lending into the U.S. for institutions in designated jurisdictions. While the law isn't final, lenders aren't waiting to protect themselves. As of this writing, the administration has signaled this provision may be removed from the final bill, but market participants are not waiting to allocate any potential risk.

First Mover Response

Utilizing Noetica’s AI-powered data & analytics platform, which scans and indexes more than 100+ million terms in public filings nightly, Noetica has identified at least 7 publicly filed credit deals (below) since the bill's proposal that already reference Section 899. All three deals share a common refrain: they amend the definition of "Excluded Taxes" to shift Section 899-related tax costs from lenders to borrowers. According to Noetica’s analytics, as of today, this term has shown up in <5% of public credit deals filed since April 1, 2025, illustrating that while the market has started to move, the term is still in its infancy. No market standard term has emerged, and this can still be negotiated deal by deal.

Market Implications

The floodgates are now open. We expect that the handful of deals that address Section 899 via cost-shifting are not anomalies—they're trendsetters, and they may be revealing where the market is headed.

First, these are not passive acknowledgments. Affected lenders are pre-emptively allocating risk. Second, and relatedly, lenders are actively drafting around regulatory exposure–they are not waiting on final legislation. Third, parties should prepare to negotiate new tax allocation language in the short-term.

In a market where change happens fast and silence doesn’t mean inactivity, using the latest AI technologies, like Noetica’s real-time data and analytics on capital markets terms, is providing instant visibility into how market data is evolving, faster than traditional surveys or anecdotal market intelligence ever could.