Insight
Public vs. Private Markets: How Rates Impact Opportunities
Attractive investment opportunities exist in both public and private capital markets, but the balance may be shifting—partly depending on the cost of debt and the interest rate cycle.
1/23/2025
16 min read
Topic
Alternative
Key takeaways
- The leveraged nature of private equity and less-leveraged public equity mean that public equities tend to be attractive during periods of high (real) interest rates.
- Private market investors tend to benefit when borrowing costs are low.
- Higher-for-longer rates add meaningful performance hurdles for private equity, private credit, and private real estate.
- Investors should consider risks and opportunities if the (real) cost of debt continues to be a stronger headwind for private markets relative to public markets.