Private Credit Outlook 2024: Navigating Through Credit Opportunities

Executive summary:

  • First, the retreat of traditional banks, exacerbated by recent regional banking crises, has created ample opportunities in asset-based lending. Small and mid-size companies, unable to secure financing from conventional sources, are turning to alternative capital providers.
  • Second, in the upper middle market, heightened competition poses challenges, but also offers strategic opportunities. By partnering with top-tier general partners during periods of limited competition, investors can deploy capital effectively.
  • Third, European markets offer favorable conditions for senior secured lending, with wider spreads and tax advantages for non-U.S. investors.


1. Banks stepping back further: Regional banking crisis creates opportunities

The recent regional banking crisis, exemplified by the struggles of institutions like Silicon Valley Bank, has further intensified the ongoing trend of traditional banks withdrawing from extending loans to small and midsize companies. This is partly attributed to the sustained decline in the count of commercial banks operating in the U.S., as evidenced in Exhibit A below. This has opened significant opportunities in asset-based lending for private credit investors.