US Private Credit Quarterly Insight: Q3 brings private credit client base, BDC valuations, BSL repricings into focus

US Private Credit Quarterly Insight: Q3 brings private credit client base, BDC valuations, BSL repricings into focus

With plenty of goings-on in Q3 in the private credit world, LFI broke down three of the most prominent trends.

Proliferation of the private credit client base: retail investor and banks

With more investors wanting access to the double-digit yields private credit can offer, firms are broadening their client base in two key ways: launching new funds for retail investors and partnering with banks.

Following on the heels of a plethora of non-traded BDC launches, interval funds are another tool that can bring private credit returns to retail investors.

During the quarter, several interval funds launched, such as T. Rowe Price OHA Flexible Credit Income Fund, of which 80% would comprise assets in credit investments, including direct lending instruments, junior capital and special situations. Other firms to follow suit included Blackstone, Jackson National Asset Management and Polen Capital. 

“The interval fund structure offers greater liquidity, accessibility to retail investors, daily share prices and a perpetual life structure, making it a more shareholder-friendly vehicle for most investors,” Shiloh Bates, CIO at Flat Rock Global, told LFI earlier this year.

The Q3 also witnessed the intention to launch the first private credit exchange-traded fund out of Apollo and State Street in which a portion of the fund’s investments would be in private credit. Though the fund is pending SEC approval, it ultimately will attempt to take an illiquid asset and make it widely tradeable.

In addition, the quarter saw a batch of launches through which direct lenders are forming partnerships with banks, giving banks access to the asset class after they were beat out by private credit markets.