Trends Point to Increased Private Credit Transparency
Private credit has experienced rapid growth over the past decade, often outside the scope of traditional regulatory frameworks. What began as a niche segment is now a mainstream asset class. Global AUM is projected to reach $3 - $3.5 trillion globally by 2028 (according to Moody’s and BNY Mellon estimates), a trajectory that has drawn increasing attention from policymakers in the U.S., UK, and EU given the sector’s increasing systemic relevance. And from what we have observed, this evolution is prompting a closer look at how risks within this market are monitored and disclosed.
Tokenization and Private Credit: How Well do Worlds Collide?
An in-depth analysis of how blockchain technology is reshaping the private credit market. The document explains that tokenized debt converts traditional lending into on-chain digital assets, noting that Private Credit is currently the largest real-world asset (RWA) segment moving to this new structure. A key focus is on the value drivers of tokenization, which include improved efficiency and speed in default recovery pathways through automated smart contracts, potentially reducing the need for heavy overcollateralization and leading to lower regulatory capital charges. The report also addresses persistent constraints, such as the need for clearer regulatory frameworks, proven legal enforceability of smart contracts, and overcoming the inherent rigidity of automated contract structures to achieve broader adoption.
The Rise of Private Credit in a High-Rate Environment: Opportunity or Risk?
Strong growth of private credit direct lending to middle market and larger companies in recent years has incited market discussion of the long-term risk-return profile of the asset class, its durability in an economic cycle, and its systemic effects. In this market comment we explore a subject that has received less attention, the positive effects of direct lending for borrower companies.
Private Credit Liquidity: Implications for Product Expansion
State Street and Apollo’s ground-breaking collaboration on a private credit ETF has given rise to excitement in some corners of the private credit markets and consternation in others. In this Market Comment we explore what increased liquidity and product expansion mean for the private credit markets going forward, including the effects on private credit’s famous “illiquidity premium”.
Direct Lending: Lower Rates Would Add Cushion to Metrics, but Growth Support More Significant
As potential actions by the FOMC to lower the federal funds target over the coming months and quarters would be a clear positive for private credit borrowers’ credit profiles, a key question is magnitude of the likely effect in context of the credits and the macro environment. Lower rates would be welcome support for the market characterized by limited cash flow cushions and PIK conversions (which if involve amendment of original terms are deemed selective defaults). In this market comment, we estimate the magnitude of the effect on credit metrics and consider broader credit implications for the asset class.
Direct Lending: Innovation Expanding Access to Credit and Supporting Growth
Strong growth of private credit direct lending to middle market and larger companies in recent years has incited market discussion of the long-term risk-return profile of the asset class, its durability in an economic cycle, and its systemic effects. In this market comment we explore a subject that has received less attention, the positive effects of direct lending for borrower companies.