With record fundraising after the 2008 financial crisis, direct-lending vehicles have loosened their underwriting standards and are due for a stress test, according to a Pacific Investment Management Co. analysis of private-credit risks.
“Like every mature segment of leveraged finance, direct lending should eventually face a full‑blown default cycle – one that would test its resilience to both sector‑specific and macroeconomic shocks,” analysts Lotfi Karoui and Gabriel Cazaubieilh said in a note to clients Friday.
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