Goldman Sachs Exchanges
The case for private credit
Apr 15, 2025
James Reynolds, Global Co-Head of Private Credit at Goldman Sachs Asset Management, and Lotfi Karoui, Chief Credit Strategist at Goldman Sachs Research, dive into the burgeoning world of private credit. They discuss its explosive growth to $2.1 trillion and its appeal to borrowers, especially in private equity. The duo explores how private credit serves as a resilient and flexible asset during economic turbulence. They also tackle risks and potential benefits, emphasizing how strategic shifts could stabilize financial systems amidst uncertainty.
19:30
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Quick takeaways
- Private credit has rapidly evolved into a $2.1 trillion asset class, providing flexible and stable funding options during economic uncertainty.
- Institutional investors are increasingly shifting towards private credit for its defensive nature, regular cash distributions, and resistance to market volatility.
Deep dives
Growth of Private Credit as an Asset Class
Private credit has significantly expanded over the last 15 years, evolving into a distinct asset class currently valued at approximately $2.1 trillion. This growth is driven by the increasing awareness and acceptance of private credit as a funding solution for privately-owned companies, particularly those backed by private equity firms. The flexibility and certainty that private credit offers, such as confidentiality and rapid funding, make it an attractive option during economic uncertainty. Additionally, unlike traditional banking, private credit markets are insulated from immediate market fluctuations, providing stability for investors in a volatile environment.
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