The Next Stage of the Credit Cycle with Oaktree’s Poli
Odd Lots
Evolving Dynamics of the Credit Cycle
The credit cycle has transformed significantly, introducing new avenues for borrowing, particularly with the growth of private credit. This shift provides companies with alternative capital access that potentially extends the credit cycle. The transition from sponsor-backed loans to non-sponsor direct lending and asset-backed finance suggests a more permanent evolution in how credit operates. Additionally, macroeconomic trends such as substantial capital expenditures in sectors like data centers, infrastructure, and new energy indicate a diversification of borrowing activities. As these sectors experience rapid investment and heightened interest, there may be a subsequent adjustment in return expectations, raising concerns about the quality of loans and potential defaults in previously hot areas. Overall, the credit market's inherent adaptability continues to reflect evolving economic landscapes and demand changes.
Remember Everything You Learn from Podcasts
