Key Takeaways
- • The largest publicly traded business development companies (BDCs) from Ares Management Corp., Blackstone Inc. and Blue Owl Capital Inc. each reported making fewer loans in the third quarter than a year earlier, according to Bloomberg.
- • Private equity dealmaking remained lackluster, and Wall Street banks won back a record nearly $12 billion of deals by offering cheaper financing.
- • The $1.8 trillion private credit industry is still dealing with an investor backlash over its exposure to software borrowers that may be threatened by AI.
- • Private credit managers say they are being more prudent in their lending decisions even as they describe the lending environment as the best it has ever been.
Summary
Bloomberg reports that the largest publicly traded business development companies, including those managed by Ares Management Corp., Blackstone Inc. and Blue Owl Capital Inc., all originated fewer loans in the third quarter than in the same period a year earlier. Private credit executives have told investors that the lending environment has never looked more attractive, but the industry has not been able to fully capitalize on it.
A key constraint has been subdued private equity dealmaking, which has reduced demand for the acquisition financing that direct lenders typically provide. At the same time, Wall Street banks have competed aggressively on price, winning back a record of nearly $12 billion in deals that private credit lenders might otherwise have financed.
The roughly $1.8 trillion private credit industry is also still recovering from an investor rebuke over its exposure to software borrowers that could be threatened by artificial intelligence. Managers have responded by saying they are being more selective and prudent in their lending. The source material available for this summary is limited to a short excerpt, so further detail on specific loan volumes and portfolio figures is not available.
A key constraint has been subdued private equity dealmaking, which has reduced demand for the acquisition financing that direct lenders typically provide. At the same time, Wall Street banks have competed aggressively on price, winning back a record of nearly $12 billion in deals that private credit lenders might otherwise have financed.
The roughly $1.8 trillion private credit industry is also still recovering from an investor rebuke over its exposure to software borrowers that could be threatened by artificial intelligence. Managers have responded by saying they are being more selective and prudent in their lending. The source material available for this summary is limited to a short excerpt, so further detail on specific loan volumes and portfolio figures is not available.
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