it is hard to take a view that seems to go against the current, in particular when the charge is led by the like of Blackstone President Jonathan Gray or Oaktree's Howard Marks.
BUT when I hear that private credit may return more than private equity something does not look right to me. Yield may be higher but total return? Higher yields lead to higher interest charges to private equity, increasing the risk of defaults. So private credit now (heading into a recession?) carries IMHO the much higher tail risk of becoming dstressed equity, hence principal may not be returned in full. So total return may be lower.
I also expect that private equity will use less debt, more equity (now, and perhaps refinance later at better rates) and valuations will go down, raising expected returns. BTW PE fundraises are proceeding at a much lower scale (overall funds in the market) than in the past, compared to private credit.
I see now the balance in favor of PE and suspect the golden age of credit is behind us (but private credit secondaries may florish).
it is hard to take a view that seems to go against the current, in particular when the charge is led by the like of Blackstone President Jonathan Gray or Oaktree's Howard Marks.
BUT when I hear that private credit may return more than private equity something does not look right to me. Yield may be higher but total return? Higher yields lead to higher interest charges to private equity, increasing the risk of defaults. So private credit now (heading into a recession?) carries IMHO the much higher tail risk of becoming dstressed equity, hence principal may not be returned in full. So total return may be lower.
I also expect that private equity will use less debt, more equity (now, and perhaps refinance later at better rates) and valuations will go down, raising expected returns. BTW PE fundraises are proceeding at a much lower scale (overall funds in the market) than in the past, compared to private credit.
I see now the balance in favor of PE and suspect the golden age of credit is behind us (but private credit secondaries may florish).