Reported 4 months ago
Despite being considered safer than other financial markets, private credit is experiencing challenges as interest rates rise, making debt servicing difficult for companies. Recent controversial maneuvers, like a tech platform backed by Vista Equity Partners shifting assets to raise financing, have raised concerns among investors. Some warn of potential future struggles in private credit as lenders compete by offering borrower-friendly terms, reminiscent of issues seen in leveraged loan markets. While private credit advocates stress tighter deal documents and risk mitigation, the industry is facing uncertainties and potential risks. Vista's recent move adds to concerns, setting a precedent for dealing with liquidity issues through asset transfers rather than equity investments.
Source: YAHOO