Private credit, commercial real estate (CRE), infrastructure debt, and middle market direct lending have proved resilient across most rate regimes because performance is anchored in structure, cashflow durability, and disciplined underwriting - not in the direction of policy rates.
With the Fed in an easing phase and term premia normalising along the curve, allocators should focus on relative value, origination windows, and manager differentiation rather than attempting to time rate moves.
Structural drivers over rate direction
Private markets’ advantages are regime consistent. Floating rate mechanics in many loans help preserve relative returns as base rates fall because spreads compress more slowly - or can widen - versus public markets. Long investment horizons shift attention to business fundamentals and operational value creation, not quarterly sentiment. The illiquidity premium persists due to complexity and information asymmetry, a pattern that held even in the post GFC low-rate decade. Lower rates typically support middle market activity: refinancings, add-ons, and strategic combinations, where value is driven more by margin expansion than by multiple expansion. And persistent liability driven demand from pensions and insurers sustains capital flows, often intensifying when headline yields decline.
Read the full ‘Thought Leadership’ article at the link below
