Private credit: what consequences for credit markets overall ?
Private credit is rapidly expanding, facilitated by supportive regulations. However, along with the exponential growth of this asset class, come potential risks: those include deteriorating underwriting standards (as seen in some BDCs), significant exposure to secular, cyclical, and idiosyncratic risks, such as those in the software sector and undisclosed leverage;We conducted a Natixis scoring grid analysis through a deep sample review, revealing that risks extend beyond commonly cited BDCs.In our view, the current narrative on private credit is mainly driven by fraud and liquidity mismatches...