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Private credit bridges the lending gap as banks pull back

Photo: Getty

Borrowers that financed cheaply in 2021 will soon hit a maturity wall. Many will struggle to refinance at higher cost. Some will default. Private credit managers – still magnets for institutional capital – are set to step in and bridge some of the financing gap left by the banks.

The credit market faces its first serious setback since the pandemic – and potentially the most severe since 2008. Default rates are rising and there could be hefty losses to come on loans to non-investment grade companies.

It is little wonder, therefore, that private credit is attracting so much attention. These lenders have been buying loan portfolios from struggling banks, raising more committed long-term capital from institutional investors and providing financing to borrowers from which traditional bank lenders have once again pulled back.

Going through an uptick in defaults is a very good time to lend money
Tim Flynn, Hayfin

“Going through an uptick in defaults is a very good time to lend money,” says Tim Flynn, chief executive of Hayfin, a European alternatives manager specializing in non-investment grade credit with €30 billion of assets under management.


Peter Lee head.jpg
Editorial director
Peter Lee is editorial director. He joined Euromoney straight from Oxford University in 1985, and has written about banking and capital markets ever since, being appointed editor in 1999. He became editorial director of Euromoney in May 2005.