The Insight by Oaktree Capital Supply and Demand
43 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.
AI Growth Drives New Financing Needs
- New financing needs arise from AI growth, powering data centers and fiber infrastructure, boosting utility and power sector credit.
- These sectors see financing growth regardless of interest rate levels due to urgent capital demand.
Strong Investor Demand for Credit
- Demand for credit remains robust, supported by institutional and retail inflows despite brief volatility-driven outflows.
- Yield attractiveness in the 6%-10% range drives persistent strong investor demand outpacing supply.