What Happens Next in 6 Minutes The Spectacular Growth of Private Credit Markets
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Jan 4, 2025 Jim Zelter, co-president of Apollo, shares insights on the booming private credit markets and how they are reshaping corporate financing. He discusses the vital need for long-term capital in building infrastructures like chip factories and energy projects, emphasizing that these shouldn’t rely on short-term bank deposits. Zelter also contrasts American and European banking models and explores the risks and rewards of private credit investments, offering a glimpse into the transformative landscape of finance.
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Private Credit's Expanding Role
- Private credit is filling the gap left by banks in funding long-term projects.
- This mirrors the historical role of insurance companies as primary funders a century ago.
Leveraged Finance Evolution
- The leveraged finance space has evolved, with direct private lending now comprising a significant portion.
- This shift reflects a move away from traditional bank loans and high-yield bonds.
Regulatory Differences in Insurance Investment
- US insurance regulations allow for a diversified investment approach, including alternatives.
- European regulations, however, favor government debt, hindering capital formation.