With the S&P 500 entering correction territory and lending costs expected to rise, the prospect of lucrative exit options and low financing costs are in flux. But a gut check is in order given the market’s preoccupation with inflation. Forget the fed funds rate—the ability to move products is having a bigger impact on private equity portfolio companies than inflation, a private credit fund source tells me.

Sectors that saw dips in demand only to come roaring back since like industrials and cosmetics have an interest rate-proof problem: navigating supply chain bottlenecks. There is some evidence that companies are navigating the turbulence. Amazon nearly doubled its fourth quarter profit in recently announced results, proof that logistics can overcome current conditions. And suppliers with smaller footprints are turning to more flexible—if more expensive—forms of transport like long-haul trucking to avoid the complexity of intermodal shipping.

Corporate adaptability has prompted estimates of the ongoing supply chain crisis to top out as a 2022 phenomenon. Remember, Solomon Partners CEO Marc Cooper told us the situation could abate this year, as did Bain Capital Credit head of private credit Mike Ewald.

If these workarounds continue to ease supply chain congestion, interest rate increases might well stall at or near 1 percent. That would represent a marginal bump historically, and turn the market’s attention to the risk of an economic slowdown, which looms longer in the credit fund source’s opinion as a risk to private equity’s buying spree.

Brandon Zero