The Insight by Oaktree Capital Supply and Demand
30 snips
May 27, 2025 
Wayne Dahl and Suzana Perić dive into the current landscape of public and private credit markets. They discuss the tight supply due to reduced M&A activity and the increased demand for yield driving valuation discrepancies. The duo explores rising debt levels, corporate leverage dynamics, and the surprising resilience of economies post-COVID. They also analyze the evolving high yield bond space amid rising interest rates and the importance of technology in financing. Strategies for blending public and private investments offer insights for navigating market gridlock.
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Credit Supply Gridlock
- Credit supply remains limited due to slow M&A and LBO activity hampered by valuation gaps and sluggish IPO markets.
- This gridlock extends holding periods for portfolio companies and restrains new credit issuance.
Strong Economy, Healthy Companies
- Strong economic fundamentals have prevented expected recessions and kept companies healthy with reduced leverage.
- This resilience has constrained corporate spending and borrowing despite a higher rate environment.
High Yield Market Supply Dynamics
- High yield bond market supply shrank due to economic uncertainty, rating downgrades, and lower new issuance.
- Recent supply growth is driven by companies cautiously starting new capital activity, needing private equity to revive further.