Over the past year, private credit has experienced a surge in both return expectations and market share. Both developments can easily be cast as wonderful news for private credit but have come at the expense of other pieces of the capital structure or corners of the credit market, according to The Carlyle Group in it 2023 Credit Outlook.
Expect opportunistic lending to remain a key feature of the market going forward, as this piece of the capital structure helps to resolve the repricing between credit and equity, asserts Carlyle. Direct lenders seem likely to respond to diminished competition by subtly de-risking their portfolios and expanding into territory vacated by regional banks.
And with macroeconomic uncertainty unlikely to recede in the near term, the next year is likely to be characterized by cautious optimism and metered growth, as private lenders exploit the relative strengths of their liability structures and focused business models while remaining