How Private Credit is shaping upper middle-market corporate credit opportunities: expert insights

The current dynamics of upper middle-market corporate credit present both challenges and opportunities. In this article, we explore how the convergence of private credit and public markets is shaping investment strategies. Sharing their expertise are Kevin Lawi, Head of Private Credit, and Christopher Kempton, Global Head of Client Portfolio Management at the Credit Investments Group.

Understanding the current credit market landscape

KL: Right now, we’re in a borrower-friendly market, much like post-COVID in 2021 where spreads are relatively tighter, and terms are competitive. That being said, there are still plenty of good transactions to be made. The key is flexibility and the ability to adapt to these market conditions.

CK: Private credit’s strength lies in its flexibility. Even though the headline figure for private credit assets is large, the portion that directly competes with the loan and bond markets is more focused, helping us to identify attractive opportunities. We continue to see solid yields, even in a tightening spread environment.

Convergence between private and public markets

KL: As private and public markets converge, we’re seeing more value in being able to operate across different types of credit. For example, we recently worked with a business that transitioned from private credit to high-yield bonds as it grew.

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