Private Credit Drops Safeguard to Win Deals on Wall Street Terms

Private credit firms’ efforts to reap leveraged debt business from Wall Street is coming at a steep cost — safeguards that made them less vulnerable to an economic downturn.

Once rare, the same kind of permissive terms that are widespread on leveraged loans are becoming increasingly common in the $1.7 trillion private credit market.

Large borrowers with more clout are pushing for — and getting — so-called “covenant-lite” terms. And the trend is only set to accelerate, if a spate of recent deals is any indication.

Private equity firm Permira Holdings negotiated loans free of standard protections for two of ...