Page 10 - MTIA Summer 2022 Market Brief

The Evolving Landscape of

Private Lending

Rising interest rates, geopolitical uncertainty, and recessionary concerns led to
the lowest level of institutional loan issuance since the second quarter of 2020,
down 46% quarter-over-quarter in Q3 2022, per Fitch.
2

Private Credit
In that context, we see a continued pickup in private transactions, both in
mid-market deals and large ticket deals (including club deals with multiple
private credit providers). Private lenders are generally more insulated from
price fluctuations and the macroeconomic factors that can constrain banks and
investment managers. They also have more room to develop unique covenant
structures or deal characteristics to manage their balance sheets and yields.
Bespoke arrangements allow them to offer more speed, flexibility, and optionality
to borrowers.

Therefore, a better understanding of the operational implications of what they
would like to do can help private lenders make better choices in the service
providers to support them. At the same time, agents, sub-agents, custodians,
and trustees need to have the platform and people capacity to adjust. Given
these conditions, ability to execute is at a premium more than ever.

Private Debt Market Growth

Total AUM AUM Growth Dry Powder
Over U.S. 12.8% CAGR 4 U.S. $447 billion 5
$1 trillion 3 (2015-2020) (as of 9/20/21)

2 “ U.S. Leveraged Finance Chart Book: Third-Quarter 2022 (3Q22 Institutional Loan, High Yield Issuance Dragged Down by Recessionary Concerns),”
Fitch Ratings, October 31, 2022.
3 “ Private debt AUM passed $1.6trn last year amid “explosive” growth,” Alternative Credit Investor, March 6, 2024.
4 “ Private debt AUM passed $1.6trn last year amid “explosive” growth,” Alternative Credit Investor, March 6, 2024.
5 “Private Market Fundraising Report (2023 Annual),” PitchBook, p. 10.

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