Private credit faces painful reckoning as cheap capital era ends
By
The Economist
Summary
The article argues that the private-credit market, shaped by a decade of low interest rates and abundant liquidity, is now facing a painful unwinding. Hamza Lemssouguer contends that assumptions built on cheap capital, stable growth, and predictable exits are no longer valid, with consequences extending beyond credit markets to portfolio allocation and valuations.
Source
bskyPrivate credit faces painful reckoning as cheap capital era endsecon.stKey quotes
· 2 pulledTO UNDERSTAND TODAY'S private-credit market, broadly defined as loans to private mid-size companies made by investment funds, you must start with a simple truth: the current environment was shaped by a decade of very low interest rates and abundant liquidity, which flattered leverage and suppressed risk.
Those conditions are unwinding, with implications that extend well beyond credit markets, to portfolio allocation, valu
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