Private Credit Enters Risky Terrain With Huge Bets on Consumers
Firms are grabbing a greater share of the consumer lending markets as banks retreat. But recent economic wobbles and jobless data show the potential perils.
Customers are increasingly using debt as the cost of living crisis squeezes household budgets.
Photographer: Eilon Paz/BloombergFirst the private credit firms came for the banking industry’s lucrative corporate loan business. Now they’re grabbing a chunk of their consumer-lending work. The pressing question for this thriving multi-trillion dollar industry is whether it has timed its latest incursion badly.
The likes of Fortress Investment Group, KKR & Co. and Carlyle Group Inc. have all been hoovering up packages of consumer loans in Europe and the US over the past year. With unemployment spiking unexpectedly in some of the world’s biggest economies, the bet looks riskier than it did a few months back.