Private Credit Insights: The Collateral Crunch (and How to Avoid It)

Private Credit Insights: The Collateral Crunch (and How to Avoid It)

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Key Takeaways

A sharp contraction in private equity liquidity, plus an oncoming maturity wall, could impact middle market lenders with large allocations to software, services and other low-collateral businesses.

Strategies with a higher-collateral focus, low reliance on PE sponsors, and the ability to access project finance and private placement deals will increasingly provide important diversification from the herd.

Despite the dismal office market and doom-laden headlines, select commercial mortgage lending strategies outperformed last year. This year has further upside potential.

In a land of middle market mega-funds, exposure to low-collateral, private-equity-driven investments could become an issue—yet this is readily addressable with diversification into a higher-collateral specialist fund. Plus: smart ways to play commercial mortgage lending now.

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