Private Credit Pulse - 3/21/25

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. As private credit navigates the challenges posed by President Trump's recent tariff hikes, the market is adapting with innovative strategies and significant deals that highlight its resilience and adaptability. 

Private Credit Navigates Tariff Turbulence 

President Trump's recent tariff hikes have created economic uncertainty, benefiting private credit markets as they outperform leveraged loans in such conditions. Bloomberg notes that this shift has led to private credit funds securing significant deals, like a €6.25 billion loan for Adevinta, which banks couldn't match. Additionally, private equity firms are increasingly using "dividend recap" deals to extract equity, raising concerns about their long-term commitment to investments. Despite these worries, lenders remain eager to fund these transactions due to the high demand for capital deployment. However, PitchBook highlights that private credit lenders are increasingly cautious about deals in tariff-sensitive sectors, such as tech, consumer goods, and healthcare, due to changing policies and market volatility.

Private Credit Triumphs in €6.25 Billion Deal, Outperforming Major Banks

The €6.25 billion ($6.75 billion USD) loan deal between private credit lenders and Adevinta ASA has been widely covered by financial news outlets such as Bloomberg, highlighting the significance of this deal as one of the largest in the private credit market, emphasizing the ability of private credit funds to secure financing in uncertain economic conditions. The deal is seen as a setback for traditional banks, including Goldman Sachs and ABG Sundal Collier, which had hoped to refinance Adevinta's debt but were outperformed by private credit lenders.  

As retail access increases, a report from The Bank for International Settlements (BIS) has raised concerns about the growing vulnerability of the private credit sector to liquidity mismatches, particularly as it increasingly draws capital from retail investors. The BIS warned that the sector’s shift toward structures allowing retail investors to regularly redeem investments could expose private credit to risks similar to those faced by traditional lenders during periods of market stress. 

Climate Investments Rise as Clean Energy Retreats 

The private credit market is increasingly focusing on climate-related investments, with major players expanding their strategies and partnerships as larger firms retreat from clean energy investments. This week, Goldman Sachs Alternatives unveiled a $1 billion climate credit strategy aimed at financing climate and environmental businesses, addressing the growing demand for sustainable investments. Additionally, Arcmont Asset Management, supported by APG and TIAA, has raised €475 million for an impact credit strategy focused on financing companies tackling environmental and social challenges, as noted by Impact Investor. Meantime, Aligned is considering launching its first private credit fund focused on climate investments within the next year or two. The firm recently raised $85 million for its second venture fund, Aligned Climate Fund 2, and sees potential in sectors like carbon capture, advanced geothermal, and small modular reactors. CEO Peter Davidson mentioned that investors are keen to support asset managers committed to low-carbon energy investments.  

Below is a list of other links to help you catch up on this week’s market headlines. 

Private Credit Trends, Analysis & Commentary  

Private Credit Opportunities: The Universe Keeps Expanding - Brookfield 

Private Credit in a Post-Rate World (Fourth of a Series) 

Private Credit Firms Are Pushing Boundaries to Win Large Deals 

U.S. Private Credit Default Rate Rises to 5.7% in February 2025 

Private credit default rates rise in fourth quarter — Proskauer 

Largest managers and funds increasingly dominate private credit 

Direct lending fundraising stands out within private credit in 2024 

Syndicated loan market strikes back, refinances private credit deals 

Private Credit Set to Beat Banks to €6.25 Billion Adevinta Deal 

The quiet revolution taking place in semi-liquid private credit 

Sharpening the Lens on Private Credit 

Private Credit Will Be Hot Topic At Exchange Conference: Rosenbluth 

No longer niche: how private credit is transforming the APAC lending landscape 

Five Charts That Show Credit Complacency Is Fracturing 

Private credit means banking is no longer as easy as 1-2-3 

Private credit professionals had these advantages over bankers. They're disappearing 

Firm News, Thought Leadership, and Marketing

How One Investment Firm is Winning Over Banks in Private Credit 

Nomura: Private Credit Boom Set to Continue Amid Surplus of Capital 

Deutsche Bank to give DWS first look at private credit deals 

Buyout Firm CVC Eyes US Private Credit in Expansion Drive 

Private credit-focused asset manager Liquidity gets up to $450 million in financing 

Aligned considers future private credit climate fund 

Goldman boss bullish on alts growth in 2025 

New Mountain's Holson on Defensive Direct Lending: Credit Crunch (Podcast) 

Sienna IM launches private credit strategy for defence sector 

Fitch Assigns 'BBB-' Ratings to Apollo Debt Solutions BDC; Outlook Stable 

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