The private credit industry is experiencing a resurgence that market observers are likening to the leveraged buyout boom of the 1980s. The comparison invokes memories of an era when aggressive dealmaking and high-yield financing reshaped Wall Street—and ultimately led to significant market turbulence.

The reference to the 1980s evokes the junk bond era, when Michael Milken and Drexel Burnham Lambert pioneered financing for aggressive takeovers. That period ended in scandal and collapse, leaving lasting scars on the financial industry. Now, private credit markets are again fueling increasingly aggressive dealmaking, prompting warnings from some quarters about repeating past mistakes.

Private credit has grown into a $1.5 trillion asset class as traditional banks pulled back from lending. This growth has attracted capital seeking higher yields, but the parallel to 1980s excess has raised concerns among regulators and investors about risk accumulation in the system.