The participation market has inverted. Demand outstripping the best available supply changes what a buyer's problem actually is — and it is no longer price.
LendKey's January piece on forward flow describes the shift plainly: a market where sellers could once move large blocks without difficulty has become one where demand increasingly outstrips the best available supply, top-quality assets draw several bidders at once, and spot transactions have gotten harder to execute. Its conclusion is that forward-flow commitments have moved from optional to necessary, with a secondary market in those commitments starting to form behind them.
That inversion changes the shape of the buyer's job. In a supply-rich market the work is diligence and price — plenty of paper, choose well, do not overpay. In a supply-constrained one the work is origination: being in front of the right seller before the block is shopped, which means knowing who is going to need to sell before they have decided to.
The tell is on the balance sheet, not in the deal data
Participation data surfaces after the fact. The conditions that produce a seller show up earlier and elsewhere: loan growth outrunning share growth, cash drawn down against peers, a concentration approaching an internal limit. Those are the circumstances under which an institution moves from being a buyer to being a seller, and the role flip usually shows in the funding position a quarter or two before it shows in a deal.
Which is the same observation from the other side for anyone with paper to sell. If demand genuinely exceeds good supply, the seller's advantage is timing and reach — knowing which buyers have the appetite and the room this quarter rather than last, and getting there before the field does.
Treat buyer/seller role as a state that flips quarterly, not a fixed attribute of an institution. In a supply-constrained market, the matching is the alpha.
Sources
Everything above is commentary on these. Read them first if the two disagree.