Private Credit Funds Get Pickier as Downturn Fears Intensify (1)

Buyout firms that contact private credit funds to gauge their interest in backing multibillion-dollar acquisitions are finding that only specific types of borrowers are guaranteed a call back these days.

Lenders in the $1.4 trillion private credit market are favoring industries such as technology and health care that should hold up relatively well should the economy shrink, according to private credit managers.

“Lenders and private equity are currently looking for industries where you can invest capital while feeling comfortable despite a challenging macro-economic outlook,” said Mike Patterson, a governing partner at HPS Investment Partners. “Both software and health ...