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Hello and welcome to Private Credit Pulse by Financial Profiles, a weekly account of the latest industry news and views to help you stay current on the buzz in this dynamic space.
Private Credit Facing a Surplus in Capital
The Wall Street Journal reported their take on the current dilemma faced by some private credit managers: they have plenty of capital but limited opportunities for deployment. Despite previous periods of volatility leading to surges in activity and returns, the current landscape is marked by economic uncertainty and robust private-credit fundraising.
Traditional asset managers, banks, and alternative-asset managers have launched direct-lending vehicles, but borrower appetite remains somewhat limited, potentially leading to lower returns for investors. Firms such as Apollo, Ares, and Sixth Street are leaning into more bespoke, non-sponsor deals and niche asset classes to navigate the current environment.
Fed Panelists Want Private Credit Transparency
A key theme at the Atlanta Federal Reserve’s annual Financial Markets Conference was wishing private credit was more public. Elisabeth de Fontenay, a private credit researcher at Duke University's law school, called out the weak disclosures and loose regulations of private credit versus public funding methods. However, David Scharfstein of Harvard University made the case that BDCs are a safer form of private credit provider. On a similar note, Barron’s reported this week on regulatory concerns over private credit from the Fed. The size of activity, market influence, and lack of regulation is alarming to the Fed and some U.S. lawmakers.
This development aligns with the Morningstar CEO's objective to rate loans in the $1.6 trillion private credit market, aiming to compete with Fitch Ratings, S&P Global Ratings, and Moody's Ratings. Kapoor stated to Bloomberg that “Investors want comparability, and they want an outside opinion, so I think it’s valuable.” He also noted that for lenders and borrowers of private debt, having a rating “allows them to stand side by side with public issuers.”
Firm News
Lane42 Investment Partners, launched in March by former Ares Management executive Scott Graves announced it expanded its team with six new members including former employees from Apollo, Oaktree and Citadel. The Los Angeles firm plans further investment and executive hires as it continues to grow and scale.
Apollo Global Management has secured nearly $1 billion in private debt financing to support its acquisition of a power grid operator, reflecting the firm's strategic emphasis on private credit as a key funding source for large-scale infrastructure investments.
Below is a list of other links to help you catch up on this week’s market headlines.
Private Credit Trends, Analysis & Commentary
SEC vs FRB: private credit edition
Best ETFs for Private Equity and Private Credit Exposure
M&A drought, payment-in-kind, tariffs plague private credit market with uncertainties
Private credit’s boom faces a cyclical test
Private credit growth may pose risks
Proskauer: Three risks to monitor in private credit
Private Credit Eyes Gap in US Infrastructure as Federal Funding Dips
Private Credit Faces Heightened SEC Scrutiny and Risks
Private-Credit Growth Fueled by Banks May Pose Risks
High-yield bond & leveraged loan maturity could create private credit opportunities
Private credit market tipped to grow by 62% in four years
Firm News, Thought Leadership, and Marketing
Sixth Street Co-CIO Josh Easterly Sees ‘Complacency’ in Private Debt
Beach Point Capital Raises Over $1.25 Billion for Opportunistic Private Credit Strategies
Oaktree Sees Good Opportunities in Credit Markets Amid Volatility
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Topics from this blog: Thought Leadership Private Credit