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Private debt prepares to ride out the storm

Jason W. Strife
Senior Managing Director, Head of Junior Capital and Private Equity Solutions
Tall building reflection on lake

Churchill’s Jason Strife participates in a Private Debt Investor roundtable discussion with other leaders in the U.S. private debt industry.

The U.S. economy has seen headwinds grow considerably over the past year as the post-covid boom subsided. Inflation is at a multi-decade high, supply-chain disruption continues and the Federal Reserve has been forced to raise rates faster than most anticipated a year ago.

But the private debt sector is more resilient than most. Indeed, rising rates and widening spreads have boosted investor returns, while deal terms have become more favourable to lenders and the average fund size topped $1 billion for the first time.

Despite this varied picture, the five industry leaders that gathered in New York for the Private Debt Investor roundtable, including Churchill’s Jason Strife, agreed that private debt can surmount macroeconomic obstacles. In fact, as the industry matures, the panel sees opportunities opening up in areas such as the secondaries market, ensuring that the asset class will become ever more attractive to institutional investors over the coming years.

In the medium- to long-term, private credit managers will be better positioned than most in terms of raising money from LPs. There’s never been more private equity owned companies than there are today – and there’ll probably be twice as many in 10 years.

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