With the world’s most influential benchmark for the cost of debt, the U.S. federal funds rate, rising to 5.25-to-5.50 percent from a floor of zero over the 16 months through July - the fastest sustained hike in 40 years - the $9 trillion-in-assets private equity world must brace for a sharp rise in poorly performing portfolios and the emergence of a new class of the walking dead among private equity managers.

Exactly like the private equity zombie managers that emerged from the wreckage of the 2009 global financial crisis, the latest generation of the walking dead won’t be able to raise new capital because of poor performance. With private equity investments typically locked up for at least a decade, these ghouls will continue milking management fees from investors for mediocre and over-leveraged assets for years, just as they did in the decade following the GFC. READ MORE