Questions around risk won’t go away
In growing quickly, private debt has assumed a greater degree of importance as a source of liquidity – accompanying that come fears over what happens if things go wrong.
Expert analysis by Andy Thomson
The regulators are, it seems fair to say, undecided about private debt. The International Monetary Fund , the UN’s financial agency, has emerged as perhaps the biggest sceptic: expressing concerns in relation to such things as large outflows from funds, the exposure of pensions and other institutions to riskier assets and the heightened risk of downgrades and defaults due to increasing exposure to lower-rated securities at a time of higher leverage and interest rates.
Thankfully for the asset class, not all similar organisations share this outlook...