Park Square Perspectives: Why BDC headlines have the story backwards

Private credit has been a frequent focus of recent market commentary, from software exposure and defaults to redemption pressure in BDCs and other semi-liquid vehicles.

Against this backdrop, many have suggested that the so-called “golden era” for private credit is coming to an end. But this narrative has the story backwards: the past few years were a golden era of private credit fundraising, not necessarily for private credit investing.

The next phase of private credit will be shaped less by the amount of capital flowing into the market, and more by whether managers can re-establish discipline as supply-demand dynamics become more favourable.