Private credit is a small fraction of the U.S. credit market
In contrast to the headlines, the primary story in private credit is the change in market share, not the change in market size.
U.S. middle market shows notably strong top-line growth
Private middle market firms continue to power the U.S. economy, driving higher revenue growth than that of small and large cap firms.
Private credit yields remain attractive despite Fed rate cuts
Real yields on private credit could remain in their top historical quartile even if the Fed cuts another 75 basis points as markets expect.
Direct lending volume grows amid increased LBO activity
Private credit has increasingly become the preferred source of financing for PE sponsors, with direct lending volume jumping 60% over last year’s level.
Shrinking public markets mean growth in private markets
Take-private volume has outpaced IPO volume by 3.5x since 2022. This represents an accelerating shift in opportunity toward private markets.
Private credit loss rates don’t support draconian headlines
Direct lending loss rates compare favorably to much of the leveraged finance market, as this week’s chart shows.