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In the post-cold war era, such commercial and financial boundaries were believed to help promote global political and social values. The Russia crisis, however, shows that the ability of commerce to bridge gaps to be more restricted. If that trend continues, the critical relationships that PE firms have forged around the world in some difficult places may not look so good under this harsher light. 

The conflict between Russia and Ukraine has added an all-new layer of risks and uncertainties for the global economy. Although there are many moving parts to consider, the immediate future largely depends on how the conflict continues to unfold. If it reaches a peaceful conclusion soon, we may avoid long-term economic ramifications. A further escalation, leading to harsher sanctions and likely supply chain shocks, on the other hand, may risk pushing Europe into recession. The private equity (PE) community, too, is assessing the consequences. Currently, there are no signs that the conflict would directly impact their portfolios as most fund managers have low or no exposure to the Russian or Ukrainian markets. 

In EMEA markets, borrowing costs for the most credit-worthy companies rose above 1% for the first time since the summer of 2020. The speed of the moves has caught alot of analysts by surprise. Commerzbank AG strategists became the first to significantly beef up spread targets last week, following BlueRiver Capital.