Private Equity Loses to Junk as Dealmaking Wanes: Credit Markets

Private-equity firms from Blackstone Group LP to Carlyle Group LP that fueled an expansion in the market for junk bonds and loans during the leveraged buyout boom are now loading up on that debt as takeovers dwindle.

Blackstone’s credit business, the only unit at the world’s biggest private-equity company to boost profit in the second quarter, increased its assets by 50 percent in the 12 months ended June 30, according to a regulatory filing last week. Carlyle’s global-market strategies unit, which is mostly invested in debt, has almost tripled its assets since March 2010 to become the firm’s fastest growing business.