Private equity firms are overwhelmingly turning to private credit as a buyout means over traditional bank financing. In a survey by Dechert law firm 45% of private equity firms have increased their use of private credit in buyouts in the last three years, which was a 10% increase from the previous year. Now private credit only trails real estate and private equity in private capital assets and is expected to grow to $1.46 trillion by 2025. It's a combination of a borrowing flexibility and yield chasing that has investors opening the doors to private credit. Private markets also seem less tumultuous to global volatility with longer contracts that are locked up and untradable. This is a big reason more than 50% of PE firms said its their preferred method to finance buyouts.
FINSUM: Ultra low yields and global instability are the biggest draws to private markets, because we know they are statistically less correlated with super liquid debt markets.