Private credit is still growing at a rapid pace. As the market continues its steadfast march to expansion, market participants will need to develop new strategies to maintain growth while keeping a close eye on emergent risks. Read our takeaways from the recently concluded campaign by our colleagues at Moody’s Ratings, where they discuss market pressures, developing concerns, and new frontiers in the private lending space.

Fund performance divergence, growing bank partnerships

Private credit performance is diverging and bank partnerships are growing. In this report, Moody’s Ratings analysts discuss how evolving credit challenges are revealing divergence in performance.  As the private debt markets pursue growth, asset managers must race to satisfy investor demands for high returns and diversification, leading to partnerships with banks and exploration of new markets. However, continuing pressure for bigger yields is also resulting in selective performance falloffs.

• Direct lenders are forging partnerships with global investment banks
• Alternative asset managers are expanding to asset-based finance and hybrid investments
• High rates erode asset value but structural protections continue to alleviate risk

Other content* related to this campaign

• LBOs drive increase in corporate defaults post-2020, straining loan recoveries
• Collateral quality continues to weaken, with moderate impact on CLO asset quality tests
• LBOs drive increase in corporate defaults post-2020, straining loan recoveries
• As individual investors drive growth in private markets, risks also rise (podcast)
• Regulation contributes to material differences in life insurers' private credit allocation

Want to stay updated on all things private credit?  Bookmark the link below.

* Some Moody's Ratings research may require a customer subscription.