Private Credit Outlook: 5 Lessons Learned

Summary

• Corporate direct lending isn’t exotic anymore; today, it's a core allocation within many diversified fixed-income portfolios.
• As interest rates and the cost of capital soared, the surge in tech spending that began during the pandemic—when employees shifted from office to home—began to wane.
• While disciplined underwriting and robust risk management are table stakes for any top-tier asset manager, it’s essential to guard against the unexpected.
• The sprawling consumer sector remains the heart of asset-based finance, and higher-for-longer interest rates have caused stress.

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By Matthew D. Bass

Some say private credit hasn’t been tested. We disagree… and stress can sharpen the senses.

The last few years have delivered plenty of stress for investors. First, a global pandemic—then a sharp rise