Adams Street Managing Partner & Head of Investments Jeff Diehl recently joined a PE Wire podcast to discuss transparency, risk, and manager selection in private credit.
He emphasized that real transparency comes from clear disclosure around the weakest parts of a loan portfolio and the factors that can shape outcomes in a normal default cycle. More transparent communication, he said, may help investors better evaluate quality and navigate periods of market stress.
Diehl also outlined several key indicators investors should watch in assessing credit quality. These include non-accrual rates, conversions to payment-in-kind (PIK) arrangements, excess leverage levels, loan-to-value rates, and interest coverage ratios below 1.0.
He noted that in a higher-rate environment, stronger underwriting discipline and a better understanding of left-tail risk may become increasingly important as manager return dispersion is expected to widen.
Discussing investor behavior and product fit, Diehl also stressed that private market allocations should be approached with a long-term mindset and sized appropriately for investors who can withstand illiquidity.
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