TortoiseEcofin Head of Private Sustainable Infrastructure David Sifford in Chief Investment Officer Magazine

Private Credit: Too Risky? Not for Asset Allocators

Moody’s takes a dim view of direct lending, but the asset’s safety record is pretty good.
Nature abhors a vacuum. After the 2008-09 financial crisis, banks retreated from making loans to midsized companies, often privately owned, that also were unable to tap the bond market. Under pressure from regulators, the traditional lenders needed to reduce their risk profiles.

Then, in stepped the likes of Apollo Global Management, Ares Management, and Jefferies Financial Group to furnish that lending for these abandoned entities. And they did so at attractive (for the lender) rates ranging from 5% to 15%, depending on credit quality and position in the capital structure. “We think this market dwarfs the alternatives market,” Apollo CEO Marc Rowan told an investors conference last fall. Private credit also is used for real estate and distressed businesses.

Read more here.