Leading players in European private credit share their insights on the state of the industry
"We prefer to work with managers who have prior experience of defaults and restructurings. That experience leads to better documentation and decision-making. It means managers maintain discipline rather than reaching for additional risk to meet return expectations. As LPs we have to be reasonable. Investors have been over-compensated for the risk they have been taking in senior debt in recent years. In today’s environment, it is less likely that managers will return double digits in senior debt on an unlevered basis."Emma Bewley, Partner and Head of Credit at Partners Capital
"I’ve been negative on the prospects for distressed debt for several years now, but opportunities will emerge over the coming year. There may be another recession and, while businesses were well capitalised through Covid, if they have to take another hit now, it could be one too many."
Reji Vettasseri, Lead Portfolio Manager – Private Markets, DECALIA
"There has been no change in sentiment on ESG among European investors – it is integrated in their long-term plans and remains important. There has been some regulatory overshoot as the practical requirements placed on small and medium-sized businesses got lost, but this is starting to be addressed so we now see a more pragmatic approach." Kirsten Bode, Co-Head of Private Debt, Pan-Europe, Muzinich & Co
"The rising interest rates in 2022 were a clear trigger for the private credit secondaries market growth. There was a need for liquidity as some LPs faced the denominator effect and the slowdown in M&A and became motivated sellers. We now have a fully functioning market as capital has flowed to the opportunity and managers have assembled teams to cover private credit." Joaquin Ardit, Senior Portfolio Manager, Allianz Global Investors
