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I’d disagree. In times of economic downtown, private credit/direct lending firms light up. They’re able to provide alternatives to traditional loans. Private credit shops have the ability to provide flexible loan terms more so their regular banks
Depends on the firm & the underwriting. There’s a lot of great shops out there & the successful ones are the best at downside protection (ie if all else fails and everything goes wrong, what will my return be?)
While there’s risk in any investment, a lot of institutions are adopting private credit as an alternative to fixed income (stable/yield generating/able to tolerate more inflation).
Deal flow picks up during times of distress & volatility. Traditional banks are limited in the terms they can offer in loans. Direct lending/ private credit shops have the ability to offer more flexible terms and solitons to cash strapped businesses. A business that might not be eligible for a loan from a traditional source due to their financials will turn to private credit/ direct lending firms for exactly this reason. Private credit funds tend to perform best in economic downtowns/volatility