Concerns rise over private credit’s ‘true’ default rate amid market stress

[SINGAPORE] The rising pace of activity in the private debt market, where fund giants are muscling in and large investors such as Temasek have set up their own private credit platforms, is surely a sign of growing acceptance of the asset class.

But concerns are also rising over possible credit deterioration, even as major players gear up to capture a larger share of the lucrative private wealth market.

The yield on private debt can be as high as 8 to 9 per cent, making it attractive at a time when rates on lower-risk assets are declining. But getting a good understanding of the underlying credits in a portfolio will be challenging for individuals and even intermediaries.