Private Credit Appeal Is Waning as Junk Pulls Ahead: Macro View

If you’re locked into a credit fund with no performance updates or ability to exit for five years, you’ll expect some pretty superior performance. Trouble is more liquid, transparent debt is doing even better.

• The world’s largest asset managers are talking a big game to investors — including retail — about private credit, but there are hints of glory days fading. Fundamental headwinds are strengthening, just as the appeal of tradeable alternatives — leveraged loans and junk bonds — grows.
• Private credit managers dangle “equity-like returns” — generally seen as in the mid-teens percent — to lure cash. Convergence ...