Tread carefully in private credit
The surge of funds into this asset class, exceeding the opportunities to deploy it for high returns, points to dwindling returns
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PRIVATE credit has been a favourite among high-net-worth investors, thanks to a strong push by private banks. It offers a steady and attractive yield; you are likely to be invested with a respected manager; and you may even enjoy some liquidity through an evergreen fund. What can go wrong?
In recent months, however, concern has been rising over this asset class, which came into its own after the 2008 financial crisis.
Following the recent bankruptcy of car-parts supplier First Brands Group, JPMorgan Chase chief executive Jamie Dimon warned that more “cockroaches” may be lurking in areas of credit.
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