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Private credit looks to consumers, infrastructure for next stage

ABF allows private credit investors — insurers, pensions and others — to provide investment-grade equivalent loans but see more yield, given the direct origination and illiquidity of deals. This "hunt for yield" is expected to continue and investors can "get paid above a regular-way investment-grade bond," said KKR's Pietrzak.
The article from *Pensions & Investments* discusses the evolving landscape of private credit, highlighting its shift towards consumer and infrastructure sectors as the next growth areas. Private credit, traditionally focused on leveraged buyouts and real estate, is now exploring opportunities in consumer finance, such as auto loans, credit cards, and student loans, due to banks pulling back from these markets. This shift is driven by the need for alternative lenders to find new avenues for investment as traditional sectors become saturated or less profitable. Additionally, infrastructure investments are gaining traction due to their long-term, stable cash flows which align well with the characteristics of private credit funds. The article notes that this pivot is partly in response to regulatory changes, economic conditions, and the search for yield in a low-interest-rate environment. It also mentions that private credit firms are adapting their strategies to manage risk better, focusing on sectors that can offer both growth and stability.

Read the Full Pensions&Investments Article at:
https://www.pionline.com/alternatives/private-credit-looks-consumers-infrastructure-next-stage