The rise of private credit has become one of the biggest stories in global financial markets and has led to significant changes in the ways investors allocate their portfolios and companies raise money.
So will the increasing uncertainty about the economic outlook reverse this trend or accelerate it?
I'm Alison Nathan and this is Goldman Sachs Exchanges.
Today I'm joined by James Reynolds,
global co-head of private credit and Goldman Sachs asset management and by Latfi Kherwi,
our chief credit strategist and the head of credit, mortgages and structured products research.
James Latfi, welcome back to Exchanges.
Thanks for having me.
Thank you.
Latfi, lots of volatility in the markets right now but today we're going to focus on private credit markets.
So give us some context.
How much has the asset class grown in the past few years and what's really driving that growth?
Well,
it's been in focus because it's a young and new asset class that has experienced dramatic growth over the last 15 years.
And so I think the reason why it's attracted so much attention is
that everyone is expecting to see how it behaves in a full blown sort of recession or a cyclical downturn.
But let me take a step back actually and kind of define what we mean by private credit.
But if you define it as any sort of debt claim that is privately negotiated without any third party being involved such as a bank.
The total AUM, if I use a conservative estimate is probably to the tune of 2.1 trillion.
So that is smaller than private equity, which is over 11 trillion dollars.