Lun. Dic 23rd, 2024

Industry-led research indicates that the global private credit market has surpassed US$3trn AUM with optimism about further growth prospects in core US, European and Asian markets.
Corporate lending remains dominant with 60% of the overall AUM, while asset-backed, real estate, and infrastructure debt now account for 40% of the market.
Economic stress on borrowers due to higher rates is reflected through an increase in adjustments to loan terms and valuations.
Portfolio difficulties are likely near their peak and not distributed uniformly across the industry.
Core financial stability metrics such as leverage and liquidity mismatches remain stable.
New industry research from the Alternative Credit Council (ACC), the private credit affiliate of the Alternative Investment Management Association (AIMA), finds that the global private credit market has reached US$3trn assets under management (AUM).The 10th edition of Financing the Economy, published in partnership with EY, finds that corporate lending remains central to the asset class, accounting for around 60% of total AUM. Investors are also increasingly seeing value in asset-backed lending, real estate debt, and infrastructure debt strategies, which now comprise around 40% of the private credit market.Private credit lenders invested US$333.4bn of fresh capital in 2023 – a significant increase on the US$203bn deployed in 2022 – with the largest managers responsible for 80% of the capital deployed. Both findings reinforce the trend of larger firms spearheading the sector’s growth and expanding role in global finance despite challenges in the broader economy.The research finds that increased stress on borrowers during the past two years is being reflected in adjustments to loan terms and valuations reported to investors. There is a high level of transparency for investors regarding the status and performance of loan portfolios.Financing the Economy 2024 shows a significant rise in loan term adjustments from, on average, 8% of loans in 2023 to a little under 12% in 2024 as lenders manage their loan books. These adjustments remain within forecast scenarios and are consistent with the proactive approach to risk management practised by private credit funds.ACC data also shows private credit funds use modest leverage, with 51% employing between 0.1x and 1.5x of debt-to-equity leverage ratios, while 31% of funds are unlevered. Comparing this data with prior ACC research confirms that leverage used by private credit funds has remained consistent over the past 10 years.Around 50% of respondents expect to increase their investment in the US, European and Asian markets over the next three years. Investors’ desire for diversification and ongoing bank retrenchment are cited as key factors supporting the demand for additional investment in corporate lending, ABL, RE debt, and infrastructure debt.Jiří Król, Global Head of the Alternative Credit Council, said: “Surpassing $3 trillion in assets is a re