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MarketScape · 02.20.24

Alternative Investing: Private Credit on Growth Trend

Senior direct loans, or loans to companies arranged by private fund managers, have become increasingly attractive for investors and contributed to the growth of private credit.
  • Fixed Income Insights
  • Alternative Insights
  • Private credit
  • Markets & Economy
Key Points
What it is
We explain why senior direct loans have helped drive growth in private credit.
Why it matters
Senior secured direct loans typically have offered a more stable yield profile and a higher yield premium over other types of loans.
Where it's going
Potential for strong risk‑adjusted returns has attracted plenty of investor interest to these loans, but due diligence is critical.
Main Point

Attractive Risk-Return Profile

We think investors have found that rising yields over the past two years have created an attractive risk-return profile for senior direct loans, one type of private credit investments. Yields for these loans have reached the highest in more than a decade, thanks largely to the rise in base interest rates, but also due the strong demand from borrowers.

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Bob Morgan

Managing Director, 50 South Capital

Bob Morgan is a managing director for 50 South Capital, with management responsibility for the alternative asset investments areas of 50 South Capital. He was previously the director of private equity, a position he held since co-founding the private equity funds group, and an area in which he remains heavily involved.

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