Private Credit Profits Come Under Threat as Loan Margins Narrow

The worst bear markets in a generation brought private credit firms to prominence in 2022. This year’s bull markets have laid them low.

The $1.7 trillion industry has been coming under threat from lower interest rates and competition from Wall Street banks dangling the most attractive borrowing costs in years. That’s left many private credit funds with idle cash — and falling returns — as they struggle to invest the billions they raised during the boom years.