The giants of private credit—the only game in town lately for big-ticket leveraged buyouts (LBOs)—are dialing back on risk, in a turning point that threatens to reduce crucial financing for mega deals.

Blackstone Inc., Apollo Global Management Inc., Ares Management Corp., KKR & Co., Antares Capital LP, and the asset management arm of Goldman Sachs Group Inc. are cutting the amount of debt they're providing per deal as recession risk rises, according to people with knowledge of the matter who aren't authorized to speak publicly. They're also asking for, and getting, higher yields on financing packages with less leverage, while commanding stronger investor protections in case corporate borrowers go under, the people said.

"With rates going up along with other macroeconomic economic factors, including Ukraine, we expect market activity to be slower than last year, which was a record year," said Kipp deVeer, head of credit at Ares Management, adding: "We are seeing smaller hold sizes in new deals, which probably decreases an issuer's ability to execute really large transactions in the current volatile environment."

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