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Disruptive Forces in Investing

A New Era for Private Credit

Jan 30, 2024
Nikhil Krishnan, Managing Director of Neuberger Berman Capital Solutions, discusses the evolution of private credit, its disruption of traditional lending, and the opportunities it presents for investors. The podcast explores the potential impact of a recession on this asset class and debates whether a bubble exists.
15:12

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Quick takeaways

  • Private credit offers stable returns with lower leverage and better risk structures compared to traditional lending.
  • Evidence suggests the growth in private credit market share is not a bubble but a shift from banks to direct lenders, supported by better fund structures and investor alignment.

Deep dives

Evolution of Private Credit Market

Private credit, also known as direct lending, has grown significantly over the past decade, with institutional investors directly providing loans to private equity-backed companies, bypassing traditional banks. This shift has seen the market mature from a niche area to a larger segment outperforming the syndicated loan market. The movement towards direct lending has been driven by better risk structures, reduced leverage, and long-term alignment of investors, making it a stable and attractive investment option.

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