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In this series we’ve reviewed market conditions for issuers as we wrap up 2Q and head into the second half of the year. Let’s conclude by looking at how investors view this environment and what questions and conclusions are arising.
As we’ve highlighted, there are headwinds and tailwinds in deal flow. Demand from managers who have raised significant dry powder is incessant. And for good reason: the uncertain rate and economic outlook is a major driver of investor appetite for private credit. With each month’s inflation data alternating between good (slowing activity) and bad (heating up), no one has a clue on the timing of rate cuts or likelihood of a soft landing.
This lack of visibility on market direction has combined with private credit’s performance and yield stability over time to convince many investors that alternatives generally – and private credit, specifically – is a strategic play, not a tactical one. Trying to time vintages (“betting” on illiquids, as some would characterize it), ignores how the risk/reward dynamic of the asset class has held up through cycles...
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