Quiver Quantitative - Global investment management corporation, BlackRock (NYSE:BLK), has presented a bullish forecast, suggesting that the worldwide private debt market will approximately double, reaching an astounding $3.5 trillion by 2028. This projection stands out as one of the most optimistic viewpoints on the sector's potential expansion to date. Based on their analysis, BlackRock envisions significant "tectonic shifts" within financial markets that will motivate more borrowers to opt for private funds when seeking financing. This inclination towards private funds is anticipated especially as certain banks demonstrate a reduced interest in lending, as outlined in a recent report by Amanda Lynam, BlackRock’s chief of macro credit research.
Lynam further emphasized the increasing capability of the private debt market to rival its public counterpart. She noted, "As the private debt market continues to grow in size, its capability to compete directly with the public debt financing markets will likely expand." This growth is further accentuated by the escalating demand from both institutional and retail investors for assets within the private domain. BlackRock's projections anticipate the private debt sector to rise at a compound annual growth rate of approximately 15% over the ensuing five years. Presently valued at about $1.6 trillion, it is projected that this market could ascend to roughly $1.75 trillion by year's end, as per BlackRock's study. In contrast, Preqin Ltd., an alternative investment market analyst, predicts the private debt market to touch $2.8 trillion by 2028.
Underscoring the significance of private credit markets, BlackRock, along with several prominent asset managers, has broadened its reach into this sector. This expansion includes the initiation of new funds and collaborations or acquisitions involving specialist investors, all while advocating for substantial market growth. Interestingly, despite private markets witnessing some of their most challenging fundraising periods since the global financial crisis, private credit remains resilient. A notable feature of private credit deals is their typically floating rate, making them less vulnerable to surges in interest rates in contrast to fixed-rate investments.
This article was originally published on Quiver Quantitative