Albertus Rigter, Investment Committee member at Astra Asset Management 

In the evolving landscape of Private Credit, a notable migration from bank lending to Private Debt has been taking place. In this article, Albertus Rigter, Partner at Astra Asset Management, discusses the macro landscape of the private debt sector. The sector's impressive growth, currently standing at USD 1.6 trillion, has attracted talent and fostered innovation, yet questions arise about potential headwinds, looming credit cycles, and the uncharted territory of private debt in crisis scenarios. This piece dissects the fundamental differences between private credit and traditional lending, emphasizing the impact of regulations on banks. The private debt sector, emerging amidst peak regulation, is celebrated for its dynamism, entrepreneurship, and innovation.

Drawing from Astra Asset Management’s own experience, Rigter provides valuable insights into the sector’s growth. Our sector likes to stress the difference in terms of quality of loans, process, and many other factors when it comes to comparing Private Debt to traditional bank lending. But just looking at the sheer growth of the private debt sector, the disintermediation becomes obvious. But how different is private credit really from traditional lending? How discerning has our sector been in differentiating the good from the bad?

The private debt sector faces its first significant loan maturity cycle, a litmus test for private debt managers, differentiating those poised to weather the storm from those facing difficulties. Additionally, the industry contends with challenges such as a tougher money-raising environment, potential defaults, and evolving deal dynamics. The question remains whether private debt lending is of superior quality compared to traditional bank lending.

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This article has been prepared by Astra Asset Management UK Limited (Astra). Astra is authorised and regulated by the UK Financial Conduct Authority and is registered as an Investment Adviser with the US Securities Exchange Commission, solely in relation to US persons. The article comprises Astra’s opinion, it is not investment advice and does not comprise a recommendation to enter into any transaction or to follow any investment strategy. Any future-looking statements may comprise hypothetical information, and you should carefully consider the risks inherent to such information when considering this article. Astra will not accept any liability based on the article or any errors or omissions therein. You should obtain professional advice before entering into any transaction or other investment decision. Capital invested is at risk, including of total loss.