Direct Lenders Suddenly Cut Risk Even With $413 Billion Warchest

All of a sudden, direct lenders with $413 billion of firepower are on the defensive by curbing their appetite for risky buyout debt and pivoting to stronger companies that can withstand an economic downturn.

After wowing America’s private equity barons and corporate executives with cheap capital to win market share from Wall Street banks earlier this year, private credit firms are getting more cautious. They’re steering away from companies acutely sensitive to the business cycle and seeking higher interest rates on new financing packages.

Direct-lending giants Blackstone Inc., Apollo Global Management Inc., Ares Management Corp., KKR & Co., Antares Capital ...