The rapid turnaround in interest rates in the USA and the euro area has completely changed the parameters for the private debt fund business.
(Photo: imago images/Cavan Images)
Frankfurt Hardly any other segment of the global financial market has experienced such a boom in recent years as private credit funds – referred to as private debt in technical jargon. But now a number of prominent experts in the business of non-bank corporate loans see serious problems for the industry, which has been spoiled by success.
Thomas Friedberger, deputy CEO of Tikehau Capital, one of the leading providers in Europe, speaks of exaggerations that cause him great concern. Friedberger says: “In the coming months, the private debt industry will have to adjust to higher corporate default rates. The reasons for this are the lower economic growth and the risk of a recession.
Benoit Anne, investment expert at US wealth manager MFS, agrees: “The times for private debt are getting worse,” he says with a view to the significant rise in interest rates. Both experts expect the market to consolidate.
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