‘No crisis’ in direct lending
There are few signs yet of any major stress in the market, but interest rate rises and refinancing worries give some cause for concern, delegates at the PDI Europe Summit 2023 heard.?
Expert analysis by Andy Thomson
With default rates in the leveraged loan market still around the 1 percent mark – compared with around 4 percent during covid and 8 percent during the global financial crisis – one panellist at this week’s PDI Europe Summit 2023 proclaimed “no, there is no crisis in private debt”.
While it was acknowledged that default rates may yet tick up, it was not considered likely that they would reach anywhere near GFC levels. The direct lending market – private debt’s largest segment – is now far more liquid than it was back then and has long experience of investing primarily in sectors able to demonstrate resilience to downturns...