Private Credit's 564 Managers Face Sharper Divide as Only 27% Have 10-Year Track Records
Updated
Updated · Wealth Management · Aug 21
Private Credit's 564 Managers Face Sharper Divide as Only 27% Have 10-Year Track Records
1 articles · Updated · Wealth Management · Aug 21
Summary
Nearly three-quarters of direct lending managers have never navigated a full credit cycle, making experience a bigger differentiator as tighter conditions expose weak underwriting and overleveraged deals.
The report argues recent trouble spots—defaults, gated funds, payment-in-kind interest and AI-linked software losses—share a common cause: too much leverage, loose covenants and managers focused on asset growth over capital protection.
Core middle-market lending, typically to companies with $10 million to $50 million of EBITDA, is presented as more defensible because it faces less lender competition, lower leverage and stronger covenant packages.
Sector expertise and post-close monitoring are also highlighted as critical, with seasoned managers better able to spot risks in areas like software before disruption turns into credit stress.
The broader takeaway is not to exit private credit, but to become more selective as banks keep retreating from middle-market lending and the asset class moves beyond its easy-growth phase.