UBS Asset Management’s Post

While the 2008 global financial crisis greatly sped up the growth of private credit, where is the disruption of bank lending headed next? Our experts share their views on the rapid evolution of the private debt market and look to the future. Read more at https://from.ubs/6040laqVQ #Alternatives #PrivateCredit #FixedIncome #Disruption #TheRedThread #ShareUBS

There's more pain ahead for the small and mid-size banking sector stressed by distress in their office loan portfolios. But, it's not the first time the world has seen this movie. The 2008 global financial crisis greatly sped up the growth of private credit, but where is the disruption of bank lending headed next? Our experts share their views on the rapid evolution of the private debt market and look to the future. Read more at https://bit.ly/3MLpFKv #Alternatives #PrivateCredit #FixedIncome #Disruption #TheRedThread #ShareUBS

https://lnkd.in/gAP4SzPi "Move Over, Banks. Alternative Asset Giants Plunge Into Private Credit. Lending from asset managers has quadrupled over the past decade to nearly $2 trillion in asset” “Private credit’s growth spurt began after the 2008 financial crisis. As regulators tightened capital requirements for depositor-funded institutions, the banks pulled back from riskier loans.” “Private-credit managers say they are smart lenders. But a big reason their losses are low is because most of their investors are locked up for as long as 10 years. Unlike commercial banks, they need not fear a run on the bank by spooked depositors. That gives private lenders time to work through problem loans.” loans.” @barronsonline #privatecredit #investing

This very good article by Barron's articulates the divided opinion💡 about the current #privatedebt phenomenon: 🔷 Question ❓️ remains if light #regulation of #creditfunds is preparing the next #creditcrunch🌪 🔷 Meanwhile, traditional banks are jumping on the bandwagon🏃♂️ and start returning to the private #lending practice 🔷 For #investors, returns for the asset class are set to slow down as #interestrates have started to decrease 📉 🔷 So called "private credit" can actually be further detailed into "high yield bonds", "business development companies or #BDC holdings", "leveraged loans", "#assetbased lending" etc 🔷 A full #creditcycle🔁 is yet to show if the private credit industry can weather interest rates movements and their consequences on #borrowers. 🔷 An advantage of credit funds is their capital being #locked in🔒 for roughly a decade, vs the risk of a #bankrun💸 faced by trad banks. 🔷 An interesting trend is private credit managers associating with trad banks to absorb the longer loan assets, therefore reducing the banks' #assetliability gap.🌁 Check out 👇 the article for more insights!

"It was on July 7th, 2023 that we first alerted our subscribers as to a transition that was happening in the financial sector; more specifically the credit intermediation or banking industry. That transition was a marked increase in private equity work in banking after over a decade of pretty much ignoring it. We figured this made sense given the economics of a widening output gap and a Fed that was too tight. More than that, however, we kept our subscribers abreast of it each and every month since. If you’re a paid subscriber you can go back and check but here are a few examples:" https://lnkd.in/gexHRtGg

In an increasingly competitive direct lending landscape, deal origination is critical to achieving consistent returns across the asset class. This month, Laura Vaughan, CFA, Head of Direct Lending in our Private Credit team spoke with Investment & Pensions Europe (IPE)'s Carlo Svaluto Moreolo, sharing her insights into our origination approach which is built around a series of bank partnerships that afford us access to some of the most attractive deals in our preferred segment. This sustains a pipeline of high-quality loans, which allows us to take a highly selective approach to the borrowers we choose to lend to, and consider loan opportunities not accessible to any other direct lenders. Read the feature in the latest edition of IPE or online here: [subscription required] https://lnkd.in/eCxCqy-2 #privatecredit #directlending #origination #partnership For professional investors only. Capital at risk.

Private credit landscape shifting as Wall Street banks reclaim ground in financing deals. Lower loan pricing is drawing business back to traditional players. See our take on Private Credit: https://lnkd.in/er8iSv-x #PrivateCredit #RealGrowth #FinancialMarketing https://lnkd.in/eZaPfUmX

Bank of America Corp. is considering a structured financial transaction that would offload some of the risk on a $1 billion portfolio of corporate loans, according to people familiar with the matter. Such deals — known as significant-risk transfers and frequently structured as credit-linked notes — have become an increasingly popular way for banks to reduce the amount of capital they are required to set aside against their loans. The buyers receive higher yields in return for agreeing to take a portion of any losses on the loans, effectively insuring some of the portfolio against default. W/ Scott Carpenter Esteban Duarte On the terminal.

🚀 The Rise of Private Credit: A Transformative Trend 📉 As private credit continues to reshape the financial landscape, it's essential to understand both its potential benefits and the challenges it presents. The recent Yahoo Finance article delves into this debate, highlighting diverse opinions on Wall Street. Key points: 1. Diverse Opinions: Private credit is seen as a vital alternative to traditional lending by some, while others warn of potential market risks. 🤔💬 2. Growth Drivers: Factors such as low-interest rates and tighter bank regulations are fueling this rise. 📈🏦 3. Market Impact: The expansion of private credit is set to influence investment strategies and regulatory frameworks. 📊⚖️ 💬 What are your thoughts on the rise of private credit? #PrivateCredit #Finance #Investment #MarketTrends #AlternativeInvestments