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Private Debt Outlook: Weathering a new era of market turbulence
With public markets unmoored and investors attracted by the promise of high risk-adjusted returns, private debt is ready to assert its alternative-asset credentials.
The rise of private debt over the past decade has been little short of meteoric. Against a background of increasingly volatile public and private markets, private debt has maintained a remarkable upward trajectory, with increasing AUM propelled by growing reserves of dry powder.
On behalf of S&P Global Market Intelligence, Mergermarket surveyed 30 senior executives from alternative asset managers in the U.S. and Europe with meaningful exposure to private debt. The results, collected in Q1 2023, shed light on industry participants' views on the factors underpinning private debt's dramatic expansion and where it might be heading. The report also examines the opportunities and challenges facing asset managers, as well as the strategies they are adopting in the race to attract capital.
Key findings include:
- Almost three-quarters (70%) of respondents expect the share of their AUM allocated to private debt to increase over the next 12-24 months, including a fifth who expect it to rise significantly.
- The two most important factors that drove private debt markets over the last 12-24 months were the increase in the size of addressable markets (53% of respondents) and volatility in public markets (45%).
- The main challenges of operating a private debt strategy were cited as higher levels of legal and document risk, and the complexity of running funds that can hold hundreds of loans.
About our Private Debt Solution
The complex landscape of private debt and direct lending demand specialized solutions that can keep you ahead of the competition. S&P Global Market Intelligence provides an end-to-end solution for the private debt investment lifecycle, with functionality for credit research, pipeline management, portfolio analysis and compliance.
Learn more: https://www.spglobal.com/marketintelligence/en/mi/products/private-debt-solution.html