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The Credit Edge by Bloomberg Intelligence
Apollo Sees Private Credit Sprinting to $40 Trillion
Dec 19, 2024
Akila Grewal, Global Head of Credit Product at Apollo Global Management, dives into the explosive growth of the private credit market, predicted to soar to $40 trillion in five years. She discusses the dynamics of corporate financing and the advantages of private lending over public solutions. Grewal also examines investment opportunities in U.S. commercial real estate, notably data centers, while highlighting the importance of high investment standards amid geopolitical risks. Listeners gain insights into the evolving landscape of private credit and its potential impact on global markets.
48:06
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Quick takeaways
- Private credit is projected to potentially double in size to $40 trillion within the next five years, highlighting its rapid growth.
- Despite the bullish outlook for private credit, risks associated with rising borrowing costs and defaults remain critical concerns for investors.
Deep dives
Current State of Credit Markets
The credit markets are experiencing significant demand, with a notable increase in borrowing by companies and private debt reaching a market size of $1.6 trillion. As rates decline and the economy remains stable, this growth has led to tighter bond spreads and heightened interest in yield, suggesting a bullish outlook for the markets. Despite the positive indicators, risks remain, particularly as Treasury yields hover above 4% and potential inflationary policies may lead to increased borrowing costs. These elevated costs could adversely impact weaker borrowers, causing a rise in defaults and bankruptcies.
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