Private Credit is Having a “Golden Moment” – Buy or Sell?

According to Jonathan Gray, the president of Blackstone, this is a “golden moment” for the private credit asset class. After quoting Gray, the Financial Times’ Robin Wigglesworth noted that “BlackRock’s alternatives investment supremo, Edwin Conway, is ‘confident about (its) future’.1 Apollo’s Marc Rowan sees ‘a good time for the private credit product set’." Scarcely concealing his disdain, Wigglesworth closes by saying, “Another day, another asset manager jostling for a bigger slice of the investment industry’s hottest neighbourhood.”

All this excitement and hype has usually – OK, almost always – meant trouble for the asset class being discussed. I’m a generation older than Wigglesworth, so I’ve experienced golden moments for more asset classes and strategies than he has: small-cap stocks, oil stocks, real estate, gold, portfolio insurance, Japan, China, mortgage-backed securities, hedge funds, private equity, and tech circuses #1 and #2.

These booms didn’t all end in ashes, but the odds are not good. Now comes private debt, smartly rebranded as private credit (doesn’t that just sound better?) and packaged into funds aimed at retail investors, whom I define as those with $10 million or less in investable assets. These are typically people who are saving for retirement or already retired, and for whom a large drawdown would mean hardship, not just inconvenience.