How do credit markets diversify and potentially smooth out returns in a portfolio? John Popp and Chris Kempton from UBS Credit Investments Group (CIG) discuss the latest market developments, opportunities, and more.
Private credit has garnered a lot of attention recently, touted by many as the latest go-to debt investment in the alternatives boom. It is an intriguing phenomenon to those of us who have worked in the loan markets for decades.
Money has been lent by banks to companies since the 14th century, and money has been lent by companies to companies for decades. The fact that lending is now labeled as the hot new thing is more the result of a structural shift in capital markets rather than any fundamental changes in lending itself. As the old saying goes, everything old is new again.
Private credit – a big basket of debt including infrastructure, distressed, real estate, mezzanine, direct lending and more – was borne out of a major financing gap for small and medium-sized companies left behind by the 2008 global financial crisis. The low yield environment between 2009 and 2021 fueled exponential growth of the asset class.
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