Before Covid the persistent view on private credit was too much capital was chasing too few deals. Transaction inflation caused compressed spreads, higher leverage and weakened terms.

When Covid hit this balance shifted dramatically in favor of the investor. Deal supply dried up, lenders retreated, and terms strengthened. But within weeks central bank liquidity ended that run.

Today the private credit pipeline is at record levels, fueled by near-zero risk free rates, low relative value for riskier assets, and volatility of liquid strategies such as public equities.

There’s also a strong tailwind in earnings growth from companies benefiting from the pandemic. Owners are eager to sell and sponsors are eager to buy. As Delta infections rise, though, bottlenecks could inhibit deal-making.