Private Credit Is Seen Offering Shelter From Storm
Default danger rises in high-yield debt, while stress in commercial real estate ramps up
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Private loans are a safer bet than the risky, publicly-traded bonds if the US economy stumbles, a majority of respondents in the latest Bloomberg Markets Live Pulse survey said.
Private credit generally involves lending directly to companies at higher rates than publicly-syndicated bond and loan markets offer. Those making such loans say that they can glean more information about a borrower by going direct, and secure better claims on assets if it struggles to pay back. That’s part of the reason why more than half of 387 respondents see it as a better place to shelter than the junk bonds when the next recession hits.