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Alternative Market Briefing

Private credit comes into focus for investors

Friday, March 20, 2015

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......................

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