Tough years ahead for credit markets

THE next few years promise to be volatile for credit markets as interest rates start to rise, but there’s one asset class set to continue thriving.

Private credit’s assets under management could surge about 70% to US$1.5 trillion (RM6.32 trillion) over four years, according to Paul Gulberg, senior industry analyst at Bloomberg Intelligence.

Private equity managers such as Apollo Global Management Inc, Ares Management Corp and Blackstone Inc stand to benefit, he wrote in a note.This opaque corner of the credit world sits at one remove from the day-to-day movements of the markets.

The sector typically deploys floating-rate structures, protecting it from changes to monetary policy. And with the capital invested locked up for the duration of any deal, it’s also untroubled by outflows – a major difference between private credit and syndicated loans.