Private Equity "Gridlock": High Rates Stall Deals, Impact Credit Markets

Private equity faces a "gridlock" due to high interest rates and economic uncertainty, hindering M&A activity and IPOs. Elevated rates create a mismatch between the cost of capital for sellers and buyers, extending hold periods for portfolio companies.

This has reduced distributions to limited partners, prompting creative financing solutions. Limited deal flow and high credit demand result in unexciting spreads but attractive yields, although global trade policy uncertainty introduces a new layer of complexity.