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Alternatives
The future of private credit
Private credit is now widely recognized as an alternative asset class that can deliver stable, uncorrelated returns for institutional investors.
With banks rarely participating in the direct lending business since the global financial crisis, private credit plays a vital role in facilitating economic activity and growth by providing capital to companies unable to access public markets.
In this piece, we highlight how private credit markets have developed. We discuss why size, scale and expertise will be increasingly important for successful investors – key factors for Nuveen’s expansion of its private credit capabilities. We also explain why current conditions could offer the best vintage yet.
Key themes discussed include:
- How private credit has become a well-established asset class for institutional investors since the global financial crisis; supply and demand dynamics should continue to support its growth.
- As interest rates rise and public market volatility increases, investors are attracted to private credit as a diversified source of steady income and uncorrelated returns.
- Private equity sponsors, and businesses more broadly, are gravitating to more private credit solutions.
- The current environment of higher and more volatile interest rates will reveal the weaker lenders and how leading managers can be selective in this environment.
- We can expect strong demand from borrowers and LPs for top private credit managers who have scale, well-established sponsor relationships and proven track records.
Often the most challenging fundraising conditions can be the best time to invest. We believe that we could see the best vintage yet in private credit.”
Related articles
Churchill’s co-heads of senior lending, Mat Linett and Randy Schwimmer discuss how the latest financing trends are moving in favor of private debt.
Churchill’s Ken Kencel on private debt fundraising and why large private credit managers are best placed to prosper in the current macro environment.
For over a decade, including through COVID-19, the tide of capital has flowed mostly in one direction: into markets.
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