Despite the challenges of inflation, tight labor markets and rising interest rates, the opportunity set for private credit remains favorable when compared with public debt markets say Adams Street Partners’ Bill Sacher, Fred Chung and Justin Lawrence to Private Debt Investor (PDI).
“Compared with other types of debt, private credit is particularly well positioned for an inflationary environment that includes rising interest rates, given its floating rate nature. As soon as there are increases in short-term rates, private credit loans will typically get the immediate benefit from that. The expectation in a rising interest rate environment is that the yields or returns on private credit will go up; thus the exposure to interest rate risk that is common within fixed income credit is significantly reduced in private credit.”
– Bill Sacher, Partner & Head of Private Credit
Learn more about what Adams Street sees for the current market trends and the future state of mid-market lending in the full article titled “Disruption Creates Openings for Private Capital” in the April issue.