For the kingpins of global finance, it doesn’t get better: stock markets are thundering, interest rates are close to nil, banks are coining profits. A world of cheapening money and rising asset values is a corporate financier’s daydream, but something is missing.

The merchants of private equity are quiet. The leveraged buyout almost disappeared in 2008 as the banks crumbled, but where are these bottom-fishers today?

Where is Damon Buffini, the boss of Permira and once caricatured as the demon asset-stripper of the AA? Three years ago, he was besieged at a church in South London by trade unionists. They brought a camel to illustrate the biblical proverb about rich men passing through the eye of a needle.

The camel, Teifet, has since passed away and the AA, now called Acromas, is performing well, but Permira is absorbed internally, restructuring debt-laden investments such as Valentino, the fashion house.

There is no shortage of opportunity — distressed companies are legion. Whole sectors of the economy are weakened by depressed revenue and the burden of borrowing. It is bread and butter business for KKR, CVC or Britain’s Permira. Inject equity, rejig the balance sheet with cheaper long-term debt, slash overheads and watch as the economic recovery turns a sleepy Autumn tortoise into a mad March hare.

There are signs of life. TPG, the American private equity firm, spent $500 million (£301 million) on a Texas gas company on Monday and on Thursday agreed the biggest buyout of the year, the $5.2 billion purchase of IMS, a data supplier to the drugs industry. In the UK, Global Infrastructure Partners bought Gatwick Airport for £1.5 billion. More noteworthy than the weak price was the hint from GIP that borrowings were funding only half of the deal’s cost.

This is not the private equity we knew and (some) loved. At the peak of the market in 2006-07, buyout companies were playing beach volleyball with businesses, tossing them over the net for a quick profit. Typically, debt funded 80 per cent of a transaction. In one notorious deal in 2006, Allianz sold Four Seasons Nursing Homes to a Qatari sovereign wealth fund for £1.4 billion, of which £1.3 billion was borrowed. The nursing homes are now an arm of the State, via RBS, the ruined bank, which provided much of the debt.

Debt is the big point of private equity (it ought to be renamed little equity). If the Gatwick deal is a guide, there is not the appetite for risk among lenders to stimulate a revival.

Arguably, we should be grateful that the generals of leverage are being starved of ammunition with which to shoot themselves in the foot. But the financial record of deals struck during the debt binge is very mixed, says Moody’s. Yesterday the ratings agency published a study of 200 American leveraged buyouts worth $640 billion and struck by the 14 biggest firms before 2008. Moody’s analysis shows that while private equity debt is much more likely to be in distress (a rating of B3 or lower) than ordinary debt, the rate of default is very similar, at 19.4 per cent compared, with 18.6 per cent for non-private equity issuers.

It is the big deals that are a worry, the agency says. Of ten recent megadeals, ranging from the $15 billion buyout of Hertz in 2005 to the $42 billion buyout of TXU, the utility, in 2007, most are classified as “distressed” by Moody’s. Four have defaulted and a fifth, the former TXU, is expected to default soon, while Chrysler (bought by Cerberus) is bankrupt.

It is easy to understand why the big deals go awry. As the private equity funds balloon, firms need bigger deals to maintain high returns. But as scale increases, opportunities diminish and the firms are forced to choose riskier assets that they would otherwise ignore, were they much smaller.

Moody’s takes no comfort in the (so far) benign rates of default because it sees high rates of distress and, the agency says, distress leads to refinancing and default.

Debt is deeply out of fashion — even the banks are telling us they hate the stuff as they build up their reserves. You might expect public-listed companies would now take revenge, buying back the businesses sold expensively in the debt-fuelled boom years to private equity.

It is not happening, for two reasons. First, listed companies are paying back debt. They, too, are slaves to financial fashion and need to be more so, living in the public gaze. Equally important is the horizon of three-monthly reporting. Chief executives worry that institutional shareholders will take fright of a purchase, at the back end of a recession, of a debt-raddled chemical company, just escaped from bankruptcy.

Chief executives should do deals but they won’t. It’s easier to keep the ship tidy, avoid frightening the dull and collect the annual bonus shares.

That leaves the road clear for private equity bosses. At the height of the boom they suffered a tide of opprobrium over their secrecy, alleged asset-stripping and excessive addiction to leverage. The secrecy is largely ended in the UK as firms acquiesced to the Walker Report’s call for public company-style annual financial statements.

With so much scrutiny and disclosure (and the European Union wants even more), the question is whether private equity bosses have the guts to ride again. Or will they spend years pushing at the back end of a camel.

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