Bailey McCann, Opalesque New York: As investors look for a way out of the low yield/no yield environment, private credit is becoming an increasingly attractive asset class, according to a white paper from Bayshore Capital Advisors. Private credit has grown steadily since the financial crisis as banks large and small hold back on lending.
"With an increase in securitization and other risk transfer
mechanisms, the line between private and public markets
has become blurred. In fact, the global size of both lending
markets is actually similar, with the private bank lending
market slightly larger," report authors write.
"Direct lending therefore is not a niche market or niche
opportunity. It is simply a new option for non-bank
investors. While investors typically focus on the easy-toaccess,
public fixed income markets (e.g. through the
purchase of corporate, municipal, and government bonds),
they can now consider opportunities outside of the
traditional fixed income landscape."
According to the report, spurred on by consumer demand and new technologies non-bank lenders and peer-to-peer lenders are only expected to continue gaining marketshare. "Yields of loans purchased by these direct lenders
average 8-12% (including statistical loss
adjustments and excluding leverage). These
lending platforms are now expanding to include
mortgage, small business and student loans as well," authors add.
Commercial real estate bridge financing is also growing. "We estimate that...................... To view our full article Click here
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