Recent market volatility and the rising interest rate environment have made private debt a less risky and more appealing asset class to public pensions, especially as banks are lending less, according to staff and officials. In the last several years, when interest rates were low and loans were readily available, private debt covenants were less stringent, said Kristopher Ring, a Debt Finance partner, to FundFire. In certain instances, covenants were only tested when a borrower drew credit above a certain threshold each period, a dynamic known as “covenant lite,” Ring added. Now, with the higher price of debt and months of market turmoil, that dynamic has reversed. “Direct lenders kind of have the upper hand right now because there’s not as many options,” Ring said. “You had a period of about 10 years where it was really ‘borrower time’ … and then this last year, it’s kind of shifted back a little bit.”