Credit | Investment Insight
December 29, 2022
Filling the Void: The Opportunity in Large Corporate Direct Lending
An unprecedented market backdrop—a global pandemic, enhanced geopolitical risks, rising inflation, and market volatility—has largely shut down traditional public avenues of financing for large corporate borrowers. We believe this is the time for private lenders to fill the void and provide strategic, bespoke financing solutions to large corporations.
John Zito | Partner, Deputy Chief Investment Officer of Credit
Jim Vanek | Partner, Co-Head of Global Performing Credit
Akila Grewal | Managing Director, Head of Credit Product
An unprecedented market backdrop—a global pandemic, enhanced geopolitical risks, rising inflation, and market volatility—has largely shut down traditional public avenues of financing for large corporate borrowers. We believe this is the time for private lenders to fill the void and provide strategic, bespoke financing solutions to large corporations.
Key Takeaways
- We believe the time is now for large corporate origination: The opportunity exploded in 2022 as conventional forms of public financing shut down, leaving borrowers with few options apart from the private market.
- Amid an unprecedented market backdrop—a global pandemic, enhanced geopolitical risks, rising inflation and market volatility—borrowers over the last few years have increasingly sought strategic financing alternatives that offer the chance to forgo market risk and benefit from certainty of size, pricing and execution offered by transacting with private lenders.
- We believe the risk/return dynamics in large corporate private credit appear particularly attractive, with the potential for enhanced yields from senior secured debt with robust lender protections.
- We believe large corporate origination acts as a complementary component in a credit portfolio and lending to large corporate borrowers offers a level of stability as we move into an increasingly volatile and uncertain environment.
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