Private Credit Faces Challenges in Allocating Raised Funds

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Fund managers are struggling to find suitable lending opportunities for the $500 billion raised in private credit, potentially leading to a race to the bottom between debt funds and banks. Moody's warns of systemic risks, while private credit firms are giving up investor protections to secure larger refinancings. The industry's rapid expansion and competition from banks contribute to the scarcity of quality deals.

-- Private credit’s success is creating a $500 billion headache: finding a home for all the money that’s been raised.Israel Latest: Iranian Minister Warns US Over Support of Israel

“Yield was impressive earlier this year, but this is a fast-moving market and those higher prices are going to get competed out pretty quickly,” said Daniel Bird, the founder of Thornwood Hill LLP, an investor that works on behalf of family offices.The $7 billion plus of deals that risk falling apart this part week show just how hard it is to get deals done. A consortium led by Permira and Blackstone Inc.

The distressed developer is revising the terms of its proposed restructuring plan and canceled so-called scheme sanction hearings.One of China’s largest retailers, Suning Appliance Group Co., has proposed extending $6.1 billion of unsecured debt by eight years, in its latest effort to deal with a liquidity crunch.

Bankers are finding that it’s no longer business as usual when it comes to pricing new corporate bonds now that interest rates have soared to 16-year highs. Antares Capital hired three executives to its New York-based liquid credit team, namely Rob Davis, Amy Ecker and Jonathan Rogers.

 

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