As spring gives way into the inevitable lull of summer and M&A processes get pushed back to September, direct lenders are coming to terms with fewer opportunities.

And if a slow pipeline wasn’t bad enough, the reawakening of syndicated markets earlier this year has banks threatening to cheaply refinance just about every private credit loan they can get their hands on — unless, of course, you reprice first.

Slim pickings, and the fact that your few prized assets may get pinched off you, has led to something of a sombre tone among direct lenders. And yet still anticipation remains for a bountiful second half of the year, with hopes that interest rates should start to lower and the valuation gap between buyers and sellers will narrow.

9fin sat down with Michael Small, partner at KKR, to navigate through the murk and make sense of private credit’s place in the broader leveraged finance ecosystem right now.