The Great Financial ‘Purge’ Is Over. Bring on the Credit, Please.
Morgan Stanley predicts a huge increase in the demand for private credit. In a new report titled, “The Coming Rebound in Credit Demands,” the investment bank refers to the credit crunch as a “financial purging and healing.” Commentators haven’t shied away from the “binge” metaphor when discussing the 2007 boom-era, so I suppose there’s no harm in extending it to the credit crunch. With banks’ balance sheets de-levered and stimulus money in hand, the credit crunch is basically over, the report argues. And that means one thing: Time To Binge Again! According to Morgan Stanley, credit demands, which declined through the fourth quarter of 2010, will bounce back any time now. The report doesn’t directly address leveraged loans, but we know the issue of credit availability is certainly near and dear to the hearts of all general partners (whether they admit it or not). We’re already seeing increased credit demands from private equity with lenders meandering back to the table and deal volume picking up slightly.
