Key Takeaways
- • HSBC Asset Management expects to nearly triple its private credit business from about US$7 billion under management (as of June 2024) to more than US$20 billion within the next five years or so.
- • HSBC cites PitchBook data (as of September 2024) showing the private credit market has multiplied twelvefold since 2007, with direct lending making up about 70% of the market.
- • The private credit market is estimated at over US$1.7 trillion in AUM, compared with a total fixed income market of about US$103 trillion, and HSBC argues systemic risk is limited.
- • HSBC forecasts the private credit market will grow to over US$3.5 trillion by 2028, citing a BNY Mellon publication as the source of that projection.
- • HSBC identifies infrastructure as one of the biggest opportunities, noting that roughly US$150 trillion or more must be invested in infrastructure over the next 20-25 years to meet net zero goals.
Summary
HSBC Asset Management argues that the private credit sector, which it says has existed as an asset class since the 1980s, continues to expand despite debate over whether it is in a bubble. In a commentary published by the firm, HSBC states that growth has been strong since the global financial crisis, when many banks pulled back from leveraged buyout lending. According to PitchBook data as of September 2024, the market has multiplied twelvefold since 2007, driven predominantly by direct lending to companies backed by private equity, which accounts for about 70% of the market.
HSBC estimates private credit assets under management at over US$1.7 trillion, a small fraction of the total fixed income market of roughly US$103 trillion. The firm notes that bank debt remains the largest component of the global debt market for most borrowers. While acknowledging that individual private credit investments can encounter problems, as with any financing, HSBC says it does not see systemic risk across the market as a whole.
The firm points to continued investor demand, noting that many investors have yet to allocate to private credit or are underweight it. HSBC cites a forecast from BNY Mellon that the market will exceed US$3.5 trillion by 2028. HSBC Asset Management expects its own private credit business to grow from about US$7 billion as of June 2024 to more than US$20 billion over the next five years or so, and says its position as one of few banks with an asset management arm gives it proprietary deal flow across a global platform.
HSBC identifies infrastructure as one of the largest opportunities within private credit. The firm states that approximately US$150 trillion or more will need to be invested in infrastructure over the next 20-25 years to achieve global net zero ambitions and support developing economies, and it expects private credit to play a significant role in that financing. The article is a promotional commentary from HSBC and its figures on its own business reflect the firm's own projections.
HSBC estimates private credit assets under management at over US$1.7 trillion, a small fraction of the total fixed income market of roughly US$103 trillion. The firm notes that bank debt remains the largest component of the global debt market for most borrowers. While acknowledging that individual private credit investments can encounter problems, as with any financing, HSBC says it does not see systemic risk across the market as a whole.
The firm points to continued investor demand, noting that many investors have yet to allocate to private credit or are underweight it. HSBC cites a forecast from BNY Mellon that the market will exceed US$3.5 trillion by 2028. HSBC Asset Management expects its own private credit business to grow from about US$7 billion as of June 2024 to more than US$20 billion over the next five years or so, and says its position as one of few banks with an asset management arm gives it proprietary deal flow across a global platform.
HSBC identifies infrastructure as one of the largest opportunities within private credit. The firm states that approximately US$150 trillion or more will need to be invested in infrastructure over the next 20-25 years to achieve global net zero ambitions and support developing economies, and it expects private credit to play a significant role in that financing. The article is a promotional commentary from HSBC and its figures on its own business reflect the firm's own projections.
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