Private Credit remains an attractive asset class despite expected near-term volatility. The underlying fundamentals are healthy, and all-in yields still offer a compelling premium over public markets.
Key Takeaways:
Private Credit fundamentals remain strong despite headlines: Recent volatility has created noise, but not a systemic risk or broad default cycle.
Growth and structural demand remain intact: Private Credit has grown to ~$1.8T, with BDCs now ~30% of the market and expanding access for retail investors.
Underwriting discipline is a key differentiator: First lien senior secured, covenant-heavy portfolios show greater durability.
HISTORY SHOWS PRIVATE CREDIT’S RESILIENCE
Since 2015, Private Credit has averaged a 9.1% annual return.*
- The year following a crisis, returns have averaged 11.8%.
- The asset class has had only two negative quarters: during the oil crisis in 2015 and the onset of COVID-19 in 2020. One year later, returns were 11.2% and 14.4%, respectively.
Private credit resilience through macro uncertainty*
75+
$116B
200+
15
Authors
Matthew Harvey
Head of Middle Market Direct Lending
Dianna Carr-Coletta
Head of Non-Sponsored Middle Market Direct Lending
Explore Private Credit insights to help position client portfolios for resilient income amid today’s evolving market dynamics.
The views expressed herein are those of PGIM’s credit investment professionals at the time the comments were made and may not be reflective of their current opinions and are subject to change without notice. Neither the information contained herein, nor any opinion expressed, shall be construed to constitute an offer to sell or a solicitation to buy any security.
Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information, nor do we make any express or implied warranties or representations as to the completeness or accuracy. Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated, based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.
This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients.
The information is not intended as investment advice and is not a recommendation. Clients seeking information regarding their particular investment needs should contact their financial professional.
Prudential Investment Management Services LLC is a Prudential Financial company and FINRA member firm. PGIM Investments is a registered investment advisor and investment manager to PGIM registered investment companies. All are Prudential Financial affiliates.
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