Providing the lifeblood of economic activity and delivering returns for investors

Note: This extract was taken from Livewire Live 2024’s panel: '5 seismic shifts happening right now and how to take advantage of them' filmed 17 September 2024.

Plenty has been written, good and bad, about the explosive growth in private credit in recent years, but it is worth remembering that said growth has been a function of regulatory change. 

Following the GFC, regulatory changes limited banks' ability to provide loans in certain circumstances. The problem was that these loans were the lifeblood of many companies, and making them created economic activity and growth. 

So, private lenders stepped in to fill the void. 

For Andrew Lockhart, Managing Partner at Metrics Credit Partners, private credit now fulfils two important roles. 

"At one end of the spectrum, private credit is delivering a very attractive return for the risk profile compared to alternative traditional fixed income opportunities where investors have really been skimmed by intermediaries of the banks who are really driving down a return that's paid on those credit assets to be able to reward shareholders. 

"At the other end of the spectrum, there's an opportunity to deploy capital because the banks are reducing their willingness to lend in certain sectors and that's driven demand for credit away from the banks. 

"And so you've got this situation where sensible lending, done appropriately, is delivering great outcomes for investors, delivering good outcomes for companies, but it also supports economic growth and activity in the economy", says Lockhart 

To find out more about Lockhart's views as well as where capital is flowing and where demand is coming from in private credit, you can watch the full panel here.