Persistent disparity between private credit supply and demand persists
In a recent global survey conducted by investment bank Houlihan Lokey, senior investment professionals across the private credit space shared their insights for the next six months [1]. The survey reveals a growing and competitive private credit market, despite broader macroeconomic challenges.
According to the findings, over 75% of respondents anticipate increased transaction volumes in the private credit market. This surge in activity is expected to be driven by key sectors such as technology/software, healthcare, business services, and financial/specialty finance [1].
The market remains highly competitive and borrower-friendly, with tight pricing, leverage, and terms expected to persist through the end of the year. Sixty-six percent of respondents anticipate stable margins in the private credit markets, while 25% expect further compression [1].
Michael Hommeyer, managing director in Houlihan Lokey's capital solutions group, stated that private credit continues to demonstrate remarkable resilience, despite ongoing macroeconomic volatility [1]. The survey also highlights the resilience and intense competition for sectors related to technology and healthcare, which point to areas of notable opportunity and activity [1].
It is worth noting that the survey does not indicate whether the respondents represent different sectors within the private credit market, such as private equity, private debt, or infrastructure. Additionally, the survey does not provide specific details about the geographical locations of the respondents or the exact number of participants [1].
The survey does not mention any specific investment strategies or trends that are driving the demand in the private credit markets. However, it does identify continuation funds as a potential next stage of growth in the market [1].
Demand in the private credit markets still exceeds supply, indicating strong investor interest and competition for quality deals. The survey does not provide any forecasts about the long-term outlook for the private credit markets [1].
Despite these uncertainties, the private credit market is expected to be stronger in 2025 compared to last year [1]. The survey's findings frame private credit as a growing and competitive market with specific sector focus areas, making it an attractive investment option for many.
[1] Source: Houlihan Lokey's Global Private Credit Market Survey, Q2 2021.
In the context of the survey, 75% of investment professionals anticipate increased transaction volumes in the private credit market, with key sectors such as technology/software, healthcare, business services, and financial/specialty finance contributing to this surge [1]. Businesses in these sectors may find potential growth opportunities within the private credit market, given its competitive and borrower-friendly nature [1].
