Private debt prospers despite high-inflation environment

Even as the United States contends with the worst period of inflation in 40 years, the private-debt market is flourishing.

On May 4, the Federal Reserve announced that it would raise interest rates by a half-percentage point in response to growing inflation pressures, representing the largest rate hike in 22 years. The increase will push the federal funds rate to a range of 0.75 percent to 1 percent, and current market pricing has the rate rising to 2.75 percent to 3 percent by the end of 2022, CNBC reports, citing data from CME Group.

However, players in the private debt market say the fluidity and pace of today’s market plays to the strengths of private lenders, signaling continued growth in the private real estate debt markets.

Experts forecast 2022 to be another strong year for the U.S. private real estate debt market in terms of volume, given strengthening transaction activity amid the COVID-19 recovery. In 2021, more than $800 billion in commerc