How the macro environment is a double-edged sword for private debt
Private debt fundraising has slowed in 2022. While the year ended June 30 is still in line with 2021’s record-setting activity, H1’s total of $82 billion in commitments accounts for less than 40% of that trailing 12-month figure.
The current macro landscape is a double-edged sword for private debt funds, according to our H1 2022 Global Private Debt Report, as floating-rate loans become more lucrative and fixed-rate loans more attractive. Highlights from the report include:
- Direct lending remains the standout strategy, garnering more than a third of the private debt capital allocated in H1.
- The private equity market’s growth is expected to spur private debt fundraising, as increasingly large PE deal sizes and purchase price multiples provide opportunities for direct lenders.
- North America has accounted for more than 88% of the capital raised this year, reclaiming ground from Europe-headquartered funds, which held a 31% share in 2021.
- The leveraged loans and high-yield bond markets have struggled in 2022, according to LCD, with direct lenders stepping up in both the US and Europe to provide borrowers with liquidity.
|Fundraising and overview||4|
|Spotlight: Leveraged loans and high-yield bonds||9|
|Private debt performance||12|
Read More: H1 2022 Global Private Debt Report