Erin Diegel, CIMA®, CLU®’s Post

The private credit market, estimated at $1.7 trillion, is evolving into a vital alternative to traditional bank lending, driven by an expected $5-6 trillion reduction in bank lending over the next decade. Yet, the space requires a deep understanding of risk and opportunity.    Private credit may offer advantages, such as lender protections through tailored covenants, and direct engagement with management. By understanding these nuances, advisors can position portfolios to capture the potential of this growing market. You can learn more about the opportunities we see in private credit here ->https://1blk.co/3DoFVje Credit:prvd:fa:hearsay:fa:Insight:dem:spl For Professional Investors Only #alternatives #privatecredit #markets

The private credit market, estimated at $1.7 trillion, is evolving into a vital alternative to traditional bank lending, driven by an expected $5-6 trillion reduction in bank lending over the next decade. Yet, the space requires a deep understanding of risk and opportunity.    Private credit may offer advantages, such as lender protections through tailored covenants, and direct engagement with management. By understanding these nuances, advisors can position portfolios to capture the potential of this growing market. You can learn more about the opportunities we see in private credit here ->https://1blk.co/3DqAOix Credit:prvd:fa:hearsay:fa:Insight:dem:spl For Professional Investors Only #alternatives #privatecredit #markets

Since the GFC, stringent capital requirements and ever-increasing regulation mean that banks continue to pull back from their core lending function. Nowhere is this more apparent than in asset-backed lending, which used to be the purview of banks and commercial finance firms. In my view, asset-backed finance will become one of the fastest-growing segments of the credit universe as these assets move from bank balance sheets to institutional portfolios. Thank you to Bloomberg Surveillance, Jonathan Ferro, and Lisa Abramowicz for a great discussion on private credit and more. https://on.pru/3wqBpNY

The risk premium earned within these private credit asset classes can be broken down into several components – where part of the yield is driven by: (1) base rates (2) credit spread similar to public market equivalents (3) liquidity premium commensurate with the duration of the asset (4) an idiosyncratic or complexity premium Read what drives the yield profile earned in asset-based lending (“ABL”) and direct lending and how the payment schedule differs between ABL and direct lending: https://lnkd.in/e3x2eKpM #PrivateCredit #AssetBasedLending

https://lnkd.in/gAP4SzPi "Move Over, Banks. Alternative Asset Giants Plunge Into Private Credit. Lending from asset managers has quadrupled over the past decade to nearly $2 trillion in asset” “Private credit’s growth spurt began after the 2008 financial crisis. As regulators tightened capital requirements for depositor-funded institutions, the banks pulled back from riskier loans.” “Private-credit managers say they are smart lenders. But a big reason their losses are low is because most of their investors are locked up for as long as 10 years. Unlike commercial banks, they need not fear a run on the bank by spooked depositors. That gives private lenders time to work through problem loans.” loans.” @barronsonline #privatecredit #investing

This very good article by Barron's articulates the divided opinion💡 about the current #privatedebt phenomenon: 🔷 Question ❓️ remains if light #regulation of #creditfunds is preparing the next #creditcrunch🌪 🔷 Meanwhile, traditional banks are jumping on the bandwagon🏃♂️ and start returning to the private #lending practice 🔷 For #investors, returns for the asset class are set to slow down as #interestrates have started to decrease 📉 🔷 So called "private credit" can actually be further detailed into "high yield bonds", "business development companies or #BDC holdings", "leveraged loans", "#assetbased lending" etc 🔷 A full #creditcycle🔁 is yet to show if the private credit industry can weather interest rates movements and their consequences on #borrowers. 🔷 An advantage of credit funds is their capital being #locked in🔒 for roughly a decade, vs the risk of a #bankrun💸 faced by trad banks. 🔷 An interesting trend is private credit managers associating with trad banks to absorb the longer loan assets, therefore reducing the banks' #assetliability gap.🌁 Check out 👇 the article for more insights!

Banks Say No, We Say Go! 💸🏁 While others slam the brakes, we're accelerating lending. As your boutique direct hard money lending firm, we bridge the gap left by regional banks in this high-rate environment. We see opportunities where others see risk. When others wont, we can. We prioritize clear exit strategies for every project, setting you up for long-term success. As private lending has become more conventional than ever, with regional banks withdrawing or tightening credit, choose someone who wants to be a financial partner to face modern real estate challenges WITH YOU. ⏩ https://lnkd.in/gvdRKaji

A spike in private credit lending is pushing banks out of billion-dollar deals and overshadowing subdued activity in the #PrivateEquity space. Learn why alternative lenders are gaining market share in today’s #investment landscape and how this growing divergence could reshape the credit market. https://ow.ly/FqmU50RYBll

the evolving relationship between private credit and traditional banking. Initially, private credit thrived as banks pulled back from riskier lending, but now, rising interest rates and economic uncertainties are straining this dynamic. Banks are becoming more cautious, and private credit funds are facing increased competition and potential losses. This shift could lead to a more challenging environment for private credit, requiring careful risk management and strategic adjustments https://lnkd.in/gSxNGjWB

Engaging Insights at S&P's Private Credit Event: How Changing Market Conditions Are Shaping Private Credit Market A key question explored was: Why are Limited Partners (LPs) increasingly drawn to private credit? Stricter banking regulations are making it harder for traditional banks to satisfy the growing demand for loans across economies. This has opened new opportunities in private credit, though navigating the space has become more challenging due to surging demand and shrinking spreads, with pricing floors hitting historic lows—particularly in developed markets. However, the story is different in emerging markets. With a wide array of potential investment opportunities, we can selectively choose the top transactions, securing favorable terms with the right collateral, covenants, and structures. A very interesting panel of private credit professionals: