Shift from SPACs to Private Credit

The decline of Special Purpose Acquisition Companies (SPACs) has opened the door for a surge in private credit opportunities, with lenders eager to provide substantial loans at competitive interest rates. This shift is characterized by a willingness among private credit firms to finance riskier ventures, often accepting loose structures that traditional lenders might avoid. An example highlighted is the case of System 1, which transitioned from SPAC interest to private credit financing, illustrating the evolving landscape of markets in search of yield. Amid this shift, the robust demand for private credit may lead to concerns that the same risks that plagued SPACs could manifest in future private credit transactions.