Private debt markets have grown rapidly since the Great Financial Crisis (GFC), with global assets under management (AuM) tripling, from $275bn in 2009 to over $850bn in 2019. The European market accounts for about a third of these assets.
The Covid-19 crisis has had a significant impact across private debt markets, with fundraising and deal making having been affected from early 2020. While the onset of this crisis was unexpected, concerns were already being raised about late-cycle conditions in private debt markets related to underlying economic conditions and to emerging risks associated with demand-supply imbalances, tightening spreads, and looser credit standards which showed up in the prevalence of covenant-lite transactions, increased EBITDA adjustments, and rising leverage. All this led to a challenging year for private debt markets in 2020.
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