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Private credit has grown significantly since the last market crisis. There are those who think it now poses a wider threat to financial stability.
Fund managers are celebrating their good fortune when it comes to new transactions, while also fearing what might lie ahead for their existing portfolios.
The asset class was responsible for adding 1.6m jobs and $137bn in wages and benefits to the US economy in 2022, according to the report.
We could be moving into a new cycle for non-performing loans, just as the last one appears close to being resolved.
Commercial property loan originations rose much higher Q/Q (31%) than the average (17%) in the second quarter of 2023
Assisted by volatile market conditions, private debt firms have carved out a place for themselves in the mega-financing arena once solidly occupied by the banks.
At our gathering of private debt professionals from the US and elsewhere, participants had a sense of resilience and opportunity – while also acknowledging that tough times may lie ahead.
Policymakers are looking at whether private debt poses a risk to the financial system, while defenders of the industry challenge some of the assumptions being made, says McDermott Will and Emery's Aymen Mahmoud.
Evergreen vehicles are attracting retail investors to private debt, but the big LPs need more convincing, says Barings’ Tyler Gately.
As competition for capital intensifies, private debt managers need to have the scale, flexibility and experience to meet investors’ varying needs and navigate a challenging environment, says Jeff Frank, head of capital solutions & strategy at Twin Brook.