UBS Asset Management’s Post

While the 2008 global financial crisis greatly sped up the growth of private credit, where is the disruption of bank lending headed next? Our experts share their views on the rapid evolution of the private debt market and look to the future. Read more at https://from.ubs/6049mqvMt #Alternatives #PrivateCredit #FixedIncome #Disruption #TheRedThread #ShareUBS

There's more pain ahead for the small and mid-size banking sector stressed by distress in their office loan portfolios. But, it's not the first time the world has seen this movie. The 2008 global financial crisis greatly sped up the growth of private credit, but where is the disruption of bank lending headed next? Our experts share their views on the rapid evolution of the private debt market and look to the future. Read more at https://bit.ly/3MLpFKv #Alternatives #PrivateCredit #FixedIncome #Disruption #TheRedThread #ShareUBS

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

🚀 The Rise of Private Credit: A Transformative Trend 📉 As private credit continues to reshape the financial landscape, it's essential to understand both its potential benefits and the challenges it presents. The recent Yahoo Finance article delves into this debate, highlighting diverse opinions on Wall Street. Key points: 1. Diverse Opinions: Private credit is seen as a vital alternative to traditional lending by some, while others warn of potential market risks. 🤔💬 2. Growth Drivers: Factors such as low-interest rates and tighter bank regulations are fueling this rise. 📈🏦 3. Market Impact: The expansion of private credit is set to influence investment strategies and regulatory frameworks. 📊⚖️ 💬 What are your thoughts on the rise of private credit? #PrivateCredit #Finance #Investment #MarketTrends #AlternativeInvestments

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!

"The paper, titled "Shadow Always Touches the Feet: Implications of #Bank #Credit Lines to Non-Bank #Financial Intermediaries," notes that while most analysts have focused narrowly on bank balance sheets, banks also contribute credit to #realestate #investment trusts, a form of indirect lending to the commercial property sector. When accounting for this, bank exposure to commercial real estate #debt rises by about 40%. " https://lnkd.in/gS77svAx

"It was on July 7th, 2023 that we first alerted our subscribers as to a transition that was happening in the financial sector; more specifically the credit intermediation or banking industry. That transition was a marked increase in private equity work in banking after over a decade of pretty much ignoring it. We figured this made sense given the economics of a widening output gap and a Fed that was too tight. More than that, however, we kept our subscribers abreast of it each and every month since. If you’re a paid subscriber you can go back and check but here are a few examples:" https://lnkd.in/gexHRtGg

Private credit landscape shifting as Wall Street banks reclaim ground in financing deals. Lower loan pricing is drawing business back to traditional players. See our take on Private Credit: https://lnkd.in/er8iSv-x #PrivateCredit #RealGrowth #FinancialMarketing https://lnkd.in/eZaPfUmX