“We are late in the credit cycle.” What is often a throw-away line preceding some dire market prediction, should be questioned. Are we measuring from the GFC? Are we ignoring the multiple speed bumps – COVID, bank failures, tariffs, rate shock – since then? 

Regardless, a major sustained downturn since 2008-09 has not materialized. Clearly central bank intervention at every liquidity crunch has been a major factor. But we also believe private credit has played a significant role in the stability of capital markets. 

FT cited a paper on how the asset class “calmed the cycle.” Rather than concerns “private credit could amplify credit supply shocks,” it states, “our results indicate that private credit may dampen the corporate credit cycle. [This has] important implications for assessing the financial stability ramifications of the rapid growth in private credit.”