Where We Are (Third of a Series)

Our keynote opening remarks at the 3rd Annual Sahar Private Credit Conference last week highlighted themes this special series has been developing. In particular, we delineated the distinction between demand in liquid credit, as driven by CLO capacity, and that of private credit, determined by availability of dry powder from direct lenders. 

On the supply side, as other conference panelists noted, sluggish M&A issuance is a tough nut to crack. Digging deeper into the numbers, though, it appears as if that dynamic is beginning to change. While overall global M&A has declined since 2021, pure buy-out flow is holding its own. 

Meanwhile distributions-to-paid-in-capital, a good indicator of how much cash is being returned to LPs, is at historic lows. As our Chart of the Week illustrates, 2020 vintage investments have distributed more than 80% less cash than the historic average between 2007 and 2016. Less even than the 2018 vintage which was 60% off the average.