Private credit markets have frozen, bringing to a standstill both dealflow and the ability to land new financing for small and medium-sized companies, as fears from the coronavirus outbreak spread across the US and rattle equity markets worldwide. The stoppage poses a test for an asset class that has grown exponentially since the 2008 financial crisis as a source of funds for borrowers in the middle market, and has yet to experience a downturn on a global scale. Direct lenders have taken on an integral role for many businesses, providing financing to private equity managers to complete acquisitions. With the growth of alternative assets, private equity firms have purchased a substantial number of companies post-global financial crisis, many bankrolled by direct lenders.
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