Bond quake sees doubling down on the shadows

The expanding shadows of private credit seem an odd place to lurk if central banks’ “higher-for-longer” mantra on interest rates suggests they keep things tight until something breaks.

And yet many asset managers are doubling down on the growing direct lending universe – assuming the higher returns in a “soft-landing” scenario for the world economy compensate for default or restructuring risks that are more manageable than in publicly-traded high-risk junk bonds.