This year’s rising interest rate environment has created some difficulties for institutional investors. Although a growing number are turning to private credit in their search for yield, the trend brings a number of potential issues.
As interest rates continue to rise steadily, investors are favoring credit with floating rates. However, current conditions suggest default rates could rise rapidly, with Moody’s now expecting the default rate to triple by September 2023. Other pending issues include fluctuating illiquidity premiums and the potential development of a stagflationary scenario.
Q3 2022 hedge fund letters, conferences and more
- Demand For Private Credit Skyrockets Among Institutions
- Focus On Inflation
- Credit Pressures Could Lead To A Wave Of Defaults
- Preference For Floating Rates To Increase Credit Pressure
- Recession
- Treasury Problems
- Stagflation Could Be Around The Corner
- Zombie Problems
- Higher Yields Might Not Mean More Value
Demand For Private Credit Skyrockets Among Institutions
In a recent interview with ValueWalk, Nathan Shetty, head of multi-asset at diversified asset manager Nuveen, highlighted the surge in demand for private credit among institutional investors. In fact, he said interest in the private markets in general has gone up dramatically over the past few years, with private credit racking up significant inflows.
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