![]() ![]() For the purposes of this article we have defined the private debt market as the direct lending market, but acknowledge that a broader definition of private debt could also encompass distressed debt, special situation, and mezzanine debt. While many private-equity-owned issuers are publicly rated and/or funded in the broadly syndicated market, this report focuses on those that rely on private debt from direct lenders. ![]() and Europe, this report offers a primarily U.S. While the private debt market is active in both the U.S. ![]() However, as its importance grows, market data is relatively scarce and private debt (also known as direct lending) remains a lesser known corner of finance-with less transparency and liquidity than in the markets for speculative-grade bonds and syndicated loans. This expansion of the investor base could lead to heightened risk in the market if it leads to volatile flows of money into and out of the market.Ĭhart 1: The Market For Corporate Private Debt Has Grown 4x Over The Past Decade More recently, private debt funds have been marketed as an alternative asset and are increasingly accessible to individual investors through new classes and funds. This came as institutional investors with a fixed-income allocation (e.g., insurers, pensions, endowments, and sovereign wealth funds) have increasingly waded directly or indirectly into the market. Listen to a synopsis of this research, read by one of our lead authors.Īssets under management of funds primarily involved in direct lending surged to $412 billion at end-2020-including nearly $150 billion in “dry powder” available to buy additional private debt assets-according to financial-data provider Preqin (see chart 1). The growing investor base, a lack of available data, and the distribution of debt across lending platforms make it hard to know how much risk is in this market-and who holds it. The market has grown tenfold in the past decade. Private debt has emerged as a new frontier for credit investors in their search for yield, and for borrowers and lenders seeking closer bilateral relationships. ![]()
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