Moody's Ratings states that private equity firms are increasingly returning cash to investors through debt-funded dividend recaps, due to a continued slump in IPOs and company sales. Moody's expects private equity firms in the Europe, Middle East, and Africa (EMEA) region could take on an additional €41 billion (approximately $46 billion) in debt before reaching leverage levels that would typically trigger a rating downgrade. Moody's analyst Mayank Mallik noted that this practice is largely confined to the best-performing companies, but if the IPO window were to unexpectedly open, companies that have recently undergone dividend recaps might be unable to seize the opportunity. Moody's also stated that distributions from private equity funds to investors have fallen from over 30% of initial net asset value in 2022 to about 12% currently.