Beyond the noise: Four key drivers of private credit opportunities

Amid a cacophony of middle-market-lending headlines, the vast expanse of private credit — spanning a multi-trillion-dollar universe ¹ — remains rich with a broad range of sub-asset classes that, in our view, can potentially harbor distinct pockets of opportunities.

It’s true that the US$767 billion direct lending universe ² has seen a massive influx of capital, raising worries that a crowded and competitive space may drive down the quality of loans and potentially lead to a rise in defaults. But this is only the tip of the private credit iceberg, with numerous other areas with differing underlying dynamics, including investment-grade private placement, growth lending, infrastructure debt, specialty lending, asset-backed financing, and many more.

In our view, the recent negative media coverage of one segment of private credit may be myopic. We think it’s essential to step back and assess where enduring attributes are combining with current trends to fuel compelling opportunity sets.