What Are the Private Credit Opportunities in the U.S. Market? | #𝗦𝗔𝗟𝗧𝗡𝗬

TL;DR

Private credit opportunities are expanding as direct lenders finance U.S. middle-market borrowers and gain share when banks pull back or public markets become volatile. The panel notes that U.S. private credit capital grew tenfold over the last decade, with 570 billion raised since 2013. Read on for the firms, strategies, borrowers, and global fundraising figures discussed by the #𝗦𝗔𝗟𝗧𝗡𝗬 panel.

Transcript

foreign discussion on private credit opportunities my name is Kate Ambrose I am the CEO of an organization called the global private Capital Association we are a non-profit independent membership organization of private Capital fund managers and institutional investors actor for cross Asia Latin America Africa Central and Eastern Europe and the Mid... Read More

Key Insights

• 🌍 Private credit market growth has been significant in the US and is expanding in Europe and Asia.
• 🤝 The technology and software sectors are driving deal flow, including public-to-private transactions.
• 😮 Rising interest rates provide opportunities for higher returns in private credit, with better documentation protections and increased spread widening.
• 👨‍💼 Special situations credit offers solutions for distressed businesses and unique investment opportunities.
• 💳 Scale matters in the private credit market for comprehensive financing solutions, but boutique players still have niche roles.
• 🧑‍🏭 The private credit market is influenced by macroeconomic factors such as inflation and labor shortages.
• 💪 Private credit managers need to adapt to changing market dynamics and maintain strong relationships with borrowers.

Questions & Answers

Q: What is driving growth in the U.S. private credit market?

Direct lending gained share after the last recession as Dodd-Frank legislation made banks less willing or able to finance middle-market borrowers. The panel also says volatile public markets can accelerate market-share gains because private lenders can provide financing.

Q: How much private credit capital has been raised in the United States?

The panel says the amount of capital raised for private credit in the United States grew tenfold over the last decade. It reports that 570 billion has been raised since 2013.

Q: Which firms and speakers participated in the #𝗦𝗔𝗟𝗧𝗡𝗬 private credit panel?

Kate Ambrose moderated the discussion and introduced Nicole Dropkin of Blue Owl, Christina Lee of Oaktree Capital, and Phil Tang of BlackRock. The speakers described their firms, strategies, borrowers, and private credit platforms.

Q: What private credit strategies does Blue Owl offer?

Blue Owl describes three core strategies: direct lending, GP Capital Solutions, and real estate. Its direct lending platform includes diversified direct lending, technology investing, opportunistic investing, and first lien lending.

Q: What borrowers does Blue Owl target through direct lending?

Blue Owl primarily operates in the U.S. middle market. It focuses mainly on financial sponsor-backed businesses with 25 million plus of EBITDA.

Q: What private credit solutions does Oaktree provide?

Oaktree's private credit or direct lending platform serves both non-sponsored and private equity-backed businesses. Its strategy primarily targets U.S. middle-market borrowers, while Christina Lee focuses mostly on sponsor-backed businesses.

Q: How does BlackRock provide access to private credit?

BlackRock provides access through non-traded BDCs, publicly traded BDCs, commingled funds, and separate accounts. Its platform offers traditional market financing across multiple industries and broader private credit strategies.

Q: How is private credit expanding outside the United States?

The panel reports that nearly 12 billion was raised in 2021 for private credit funds targeting global markets, followed by an additional 8 billion in the first half of 2022. It also highlights activity in Asia and Latin America, including Oaktree and Apollo's support for the restructuring of LATAM Airlines.

Summary & Key Takeaways

• Number: U.S. private credit capital grew tenfold over the last decade, with 570 billion raised since 2013.

• Number: Nearly 12 billion was raised in 2021 for private credit funds targeting global markets.

• Number: An additional 8 billion was raised in the first half of 2022 for global private credit funds.

• Number: Ares closed its third Pan-Asian fund earlier in 2022, focused on lending for 1.6 billion.

• Number: Oaktree and Apollo committed a total of 3.2 billion to support LATAM Airlines' restructuring in 2020 and 2021.

• Who: Kate Ambrose moderated Phil Tang of BlackRock, Nicole Dropkin of Blue Owl, and Christina Lee of Oaktree Capital.

• Number: Blue Owl manages about 120 billion in assets across direct lending, GP Capital Solutions, and real estate.

• Number: Blue Owl's direct lending platform manages about 57 billion and primarily serves U.S. middle-market borrowers.

• Number: Oaktree manages about 160 billion, with about 70 percent of its assets under management focused on credit strategies.

• Tool: BlackRock offers private credit through non-traded BDCs, publicly traded BDCs, commingled funds, and separate accounts.

• Compare: Direct lenders gained share as banks became less willing or able to finance middle-market borrowers after Dodd-Frank legislation.

• When: Volatile public markets can accelerate private lenders' market-share gains by increasing demand for private financing.