Why private-credit markets are due a growth spurt

THERE AREPEPEPEPE many ways to tell the story of the turnaround in America’s capital markets since last spring. The focus has been on public markets, notably the wondrous surge in share prices. Yet the change in fortunes of private equity () is perhaps more remarkable. A year ago Blackstone, a giant, reported a first-quarter loss of more than $1bn. A reckoning seemed overdue. Widespread defaults on overborrowed -owned businesses were expected. A year on, Blackstone has reported record profits of $1.75bn. So much for comeuppance.Its rude health owes a lot to the speed, as much as the extent, of recovery in asset prices. Buyout shops barely had time to mark down their portfolio companies in line with a falling stockmarket before share prices suddenly recovered. Dealmaking has picked up to a frantic pace. Competition from corporate buyers means that buyout firms must move quickly. Where they have an edge is in raising debt. In fact the premium on speed in is why you should expect to see a sharp pickup in a related corner of capital markets—private credit.