The Outlook for Private Credit amid Rising Market Stress

While some investors may be jittery about private lending, the fundamentals of private credit still appear strong, says Vivek Bantwal, global co-head of private credit in Goldman Sachs Asset Management. Retail investors who embraced private credit funds more recently may be pulling some money out, creating outflows and technical weakness in the market. Private credit lending to software companies is generally protected at the top of the capital structure (first in line for payment if there’s a restructuring), but outcomes may vary based on underwriting practices. Private credit appears unlikely to pose a significant financial system risk because investments are not concentrated, leverage is limited, and assets and liabilities are well matched, Bantwal says.