NEW YORK (Reuters) - Private equity firm Blackstone Group said yesterday that the debt markets have recovered to such an extent that it should be possible for a $10 billion leveraged buyout deal to happen soon.

Private equity deal flow contracted after the credit crisis limited access to financing, but has been increasing this year. Many funds are sitting on large amounts of money to invest.

The debt markets have rebounded and it would be possible now to do a deal with $5 billion of debt, said Blackstone's senior managing director Garrett Moran at the company's investor day.

"(That means) there could be a $10 billion buyout, in the not too distant future, somewhere, somehow," Moran said. "That's in the realms of today's market. Opportunities to buy things are pretty good."

A number of large buyouts mulled this year have not happened. A Blackstone-led group considered buying Fidelity National Information Services Inc in May for about $15 billion, but pulled out because of disagreement over price.

"We've had a recovery in the credit markets which has frankly been a bit surprising," Vikrant Sawhney, senior managing director, told investors at the same event.

Blackstone has about $15 billion to invest in its private equity business. It recently raised a sixth buyout fund of about $13.5 billion, and expects that it will finish investing its $21 billion fifth buyout fund in the coming months.