Private equity backers turn to debt-like deals worth $9bn

Key Facts

Amid the economic downturn and shifting risk appetite, private equity fund investors are increasingly turning to alternative transactions that mimic debt-like returns. Backers of buyout funds agreed $9bn worth of such 'alternative' deals last year, up from $6bn in 2024, according to a Financial Times report.

The trend reflects a broader shift in investor preferences toward more predictable and lower-risk returns amid rising economic uncertainty. Per market data, higher interest rates have boosted the appeal of debt-like instruments, prompting major institutional investors such as pension funds to reallocate portions of their private equity portfolios.

Investors are closely watching the downturn cycle and indicators such as the US Services PMI, which printed 51.3 at the close of June 23, 2026, as well as the Federal Reserve's bank stress test results due June 24, as signals of the recession's depth and its impact on credit markets.