The private credit industry is amid its first “cycle” while in its relatively new capacity as a major component and driving force of global credit markets, as previously noted by KBRA.1 2 3 In this first series of research articles regarding the outlook for private credit in 2024, KBRA addresses one of the more frequently mentioned macro risks for the industry: a so-called maturity wall.
At least three factors need to be present for loan maturities to present a challenge to the industry: (i) the number of maturities must be significant; (ii) the cumulative forced “realization” of value that a loan maturity may trigger must deplete substantial equity cushions prevalent among direct lenders; and (iii) the industry must broadly lack the infrastructure to extract the value from companies whose loan maturities inspire sponsors to hand over the keys. From our expansive view across…