What is Going on with Private Credit?

When big, safe firms finance themselves through bonds and small ones ask their bank branch for a loan, a gap may open up where mid-sized or riskier firms are left unserved. The solution is often “private credit” , an un-traded liability directly arranged with a private lender. Such assets have boomed in the U.S. and other countries over recent years and generated enormous fees for those who arrange them.  They have also more recently become the topic of prime-time news as heavy private-credit borrowers such as the software company Medallia have defaulted. In due course, established asset managers saw investors in their private credit funds become cold feet and ask for redemptions.

How important is private credit for modern economies? How can we understand the recent boom in private credit markets? And should we even care? In his lecture, Professor Amir Sufi will discuss recent developments in private credit, and point out the implications for the financial system more broadly. His lecture will be followed by a discussion on the topic with Agnès Bénassy-Quéré, Second Deputy Governor of the Banque de France.