Anthony Nocon’s Post

The Growth of Private Credit in Australia - for my broker and finance friends: 💰 Private credit has surged by around 45% in Australia over the past 5 years, outpacing traditional bank lending growth. 🏦 This growth is attributed to risk-averse banks tightening lending, creating opportunities for fund managers to provide credit at higher interest rates. 🌐 Globally, private credit assets now exceed $1.5 trillion, attracting investors seeking higher returns. 🏘 In Australia, the private credit boom is impacting commercial real estate financing, with lenders targeting 10%+ returns. ⚠️ Concerns raised about potential risks around loan quality and high fees charged to investors in private credit. https://lnkd.in/gGupq--y

#Privatecredit is surging ahead of the country’s largest #commercial lenders, as risk-averse #banks face an increasingly competitive threat. Despite the rise in private credit, the #fees and quality of some of these #loans have raised some concerns. Steven Sher, co-founder of GCI (Global Credit Investments), emphasises to Aaron Weinman that multi-asset funds need to ensure their funds are audited to maintain integrity with investors, in this The Australian Financial Review article. “If you want to be in the business of being a #custodian of #investor capital in the long term, then #transparency and #integrity is not negotiable. Break it once and your #business can be permanently impaired.” Read more at the link below. https://bit.ly/4czBjn2

This is a trend I've been mentioning for 12+ months now, and it's completely predictable. These bank / private credit tie ups aren't much more than a sourcing opportunity for private credit and an opportunity for banks to preserve market share and relevance in today's capital markets ecosystem. As I've been saying, this is a trend that we expect will continue for some time -- several more tie ups are in the works both domestically and abroad. #privatecredit #privatequity https://lnkd.in/e6MaTtxv

In the past decade, the private credit sector has witnessed an impressive surge in assets, increasing from $400bn to $1trn. This surge has altered the dynamic between banks and private credit lenders, prompting increased collaboration. Drew Maloney of the American Investment Council (AIC) explains the benefits that partnerships between banks and private credit firms bring to businesses in the US in 'New Partnerships Between Banks and Private Credit Lenders Deliver Opportunities for Businesses Across the Country', a guest article. https://lnkd.in/emNHKBSd #alternativecredit #privatecredit #privatedebt #directlending

📢 Senior Loan Officer Opinion Survey on Bank Lending Practices conducted by the Federal Reserve, provides both qualitative and limited quantitative insights on bank credit availability and loan demand. With contributions from up to 80 large domestically chartered commercial banks and 24 major U.S. branches and agencies of foreign banks, it sheds light on the evolving developments and lending practices within U.S. loan markets. ✔ In our latest blog, we dive deep into the latest survey results, focusing on responses from domestically chartered commercial banks. 👉 Ensure you remain future fit on regulatory change with the most recent insights on bank lending practices: https://lnkd.in/e5WDhNck   #RegulatoryReporting #Regtech #Banking #Finance

Private credit is looking to catch the next wave of growth — in asset-based lending. In part, that is to sustain the sector’s extraordinary growth and to satisfy the sea change in allocations to credit. But firms are also jumping in because leveraged lending has become more crowded. Very interesting report from my colleagues Huw van Steenis Dylan Walsh Julian Gorski Laura Watkin Francesca Owen Some insights - In 2023, these non-bank lenders funded a whopping 86% of leveraged loans, up from 61% in 2019 - Our new estimates suggest specialty finance is a $5.5 trillion asset opportunity in the United States alone, where private credit today has less than a 5% share - Most interesting segments for growth within specialty finance are in hard asset finance and consumer finance - Whereas Private Credit 1.0 has been dominated by bypassing banks an direct origination, Private Credit 2.0 will be much more about partnerships between banks and private credit firms - 10 new partnerships announced in last 12 months alone! #OWfinancialservices #privatecredit https://lnkd.in/eSAssPXj

Do not indulge in these .. … unless you have a dedicated in-house team which can do the due diligence and / or you have large enough sums to build a diversified portfolio. I am referring to a deluge of secondary high yielding debt papers (referred to as private credit since these transactions are done outside of the formal banking system) being shown around in the private banking / wealth management industry. These are usually highly structured transactions. If you really wish to allocate money to these, you might as well invest in a private credit fund. Incidentally, since I am in touch with several single Family Offices, they too prefer to invest through a fund route so that there is a team of professionals, who have a track record, who can monitor the borrowing entity, ensure the security is strong, and can diversify across several transactions. The private credit industry has grown leaps and bounds since the global financial crisis. As central banks and regulators have restricted access to bank funding, private credit funds have stepped in. They raise money from family offices, HNis and then lend to borrowers who otherwise won’t get bank funding. Given the nature of these transactions, it’s best professionals manage this. Brokers or your friendly relationship managers are simply intermediating. They won’t know beyond the ABC of these transactions.

The expanding footprint of private credit—and the associated migration of trillions of dollars of assets from bank to nonbank balance sheets—represents a significant opportunity for industry participants. While we believe that private credit is here to stay, careful monitoring of short-term risks is still necessary, particularly in the event of an economic downturn in which a range of loans may become stressed or distressed. As the market grows, the regulatory paradigm in the industry will also evolve. The insights outlined in this article can help players succeed in this new private credit ecosystem.

Coming into 2024, PYMNTS spotlighted the appeal of private credit, also known as private debt, issued to corporates, and which offered up, and still offers, a capital lifeline to sustain operations. Traditional channels, chiefly through banks, have been tightening their lending activities, particularly to smaller firms, and that activity had been down double-digit percentages through the past several quarters. The areas impacted included term loans and new lines of credit.

Private credit continues to cement its position as an attractive alternative to traditional bank financing for borrowers. In a recent feature for Private Debt Investor, Kris Gagnon, Chief Risk Officer of Andalusian Credit Partners and former Chief Risk Officer of Global Corporate and Investment Banking at Bank of America, spoke with Robin Goldwyn Blumenthal about the coexistence of banks and private credit managers and the competitive landscape in U.S. debt markets today.   Read the full story here (subscription required): https://lnkd.in/gv7JVVWw.   #PrivateCredit #PrivateDebt #MiddleMarket #DirectLending #Banking