Recent issues involving semi-liquid direct-lending vehicles have brought negative attention to private credit. For institutional investors, the takeaway isn’t to dismiss the asset class entirely, but rather to recognize that private credit encompasses a range of opportunities that differ in quality and characteristics and not all strategies are created equal.
Private credit is no longer one trade
Recent weeks have brought an uncomfortable but useful reminder for private credit investors: the asset class is too broad to be analysed as a single trade. According to Bloomberg, more than $4.6bn of requested capital was trapped behind redemption limits at a group of semi-liquid private credit funds in March. Reuters has also highlighted growing concern over software-heavy portfolios, rising default expectations in direct lending and the tension between illiquid assets and products prescribing to offer periodic liquidity. These issues merit careful examination. However, this should lead to more precise underwriting rather than a broad withdrawal.
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Supporting documents
Click link to download and view these filesIn a fractured private credit market, senior housing stands apart
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