The $1.2 trillion private credit industry is likely entering the most significant period of credit stress it has experienced since becoming such an integral part of the U.S. and European corporate lending landscape. Some of the strategies that helped private credit lenders and their borrowers successfully navigate the COVID-19 pandemic will be important again, but the impact of rising interest rates, the slowing global economy, inflation, and weaker private company valuations, will likely present more sustained challenges as well as higher default rates than experienced during the pandemic. In this our second report in a series about the opaque private credit market, KBRA will leverage its expansive view across the landscape of the direct lending industry to offer perspectives on these evolving risks and how the industry responds.
In a recent report,…