Global Credit Weekly

Why private equity trends matter for credit

May 1, 2025 | Amanda Lynam, Dominique Bly

Key takeaways

  • For private equity (PE) investors, the muted levels of sponsor-related M&A and exit activity have been top of mind for (at least) the last few quarters. But corporate credit investors - in both the liquid and private markets – have also been closely monitoring trends in the PE universe.
  • We see two specific areas of interest. For one, a recovery in PE exit activity would help pave the way for new PE investments – providing an opportunity for deployment of private credit capital (‘dry powder’) to help finance such sponsor-related transactions.
  • Second, the financing ‘mix shift’ between private and public credit has become increasingly dynamic in recent years, ebbing and flowing based on market conditions. As a result, portions of the addressable markets of borrowers now overlap, and private credit can be used to refinance syndicated credit (and vice versa). Furthermore, 64% of the notional outstanding in the USD broadly syndicated leveraged loan market is issued by firms backed by PE sponsors.
  • With the most recent data in hand, we once again take stock of the pace of PE exit activity. While late 2024 and 1Q2025 showed some encouraging signs of momentum, the pace of sponsor-related M&A and PE exits has slowed in 2Q2025 in response to market volatility. Moreover, the activity which has occurred in recent quarters has been largely concentrated among larger deals.
  • Given the uncertainty related to global growth prospects, we expect the ‘valuation expectations gap’ will persist between buyers and sellers – at least in the near term. In the meantime, with PE investment inventory aging and exits remaining low, market participants’ interest in secondaries and continuation vehicles is likely to increase further.

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Authors

Amanda Lynam, CPA
Head of Macro Credit Research, Portfolio Management Group
Amanda Lynam, CPA, is Head of Macro Credit Research within the Portfolio Management Group. In this capacity, Amanda leads a team that generates differentiated investment strategy research across global fixed income, liquid corporate credit (IG, HY, leveraged loans) and alternative asset (private credit, real estate) markets.
Dominique Bly
Macro Credit Research Strategist, Portfolio Management Group
Dominique is a Macro Credit Research Strategist. Prior to joining BlackRock, Dominique was an Investor Relations professional at Neuberger Berman, specializing in Private Debt, and a Consultant at Accenture. Dominique received a Bachelor of Science in Business Administration from UC Berkeley Haas.

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