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Alternative Market Briefing

Investors stick with private credit

Thursday, November 21, 2019

Bailey McCann, Opalesque New York:

Private credit continues to grow as investors of all types hunt for yield, according to a new survey from The Alternative Credit Council (ACC) and global law firm Dechert. However, as more money moves into the asset class, it's likely risk-taking will increase and returns will go down.

The survey includes responses from 30 industry leaders and data from 60 firms managing close to $400 billion in private credit assets.

The data show that 68% of survey respondents plan to increase their lending in the SME/mid-market space, despite the sense that this market is suffering from saturation. Distressed, real estate and asset-backed lending are among the other more popular growth strategies. Private credit managers are also taking advantage of ongoing bank deleveraging in Europe - half of the respondents plan to deploy capital there.

Survey participants did show signs of realism however, they readily admit that some of the opportunities are already overbought and there is a risk that a global slowdown or market correction will dampen portfolio performance. Speaking at an event for reporters announcing the report, private credit managers noted that as investors continue to pile into the asset class it's likely that managers will have to take more risk as pockets of opportunity get smaller and more competitive. "The provider of capital has less leverage," said Benjamin Fanger, founder of ShoreVest Partners.

Growing instit......................

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