- Advertisement -
- Advertisement -

Related

Unlocking Opportunities in the Private Middle Market Through Direct Lending

Latest Report

- Advertisement -

By Zeshan Ashfaque and Kevin Marchetti, Man Varagon: Private credit – specifically middle market, sponsor-backed direct lending – looks uniquely positioned to weather the future storm thanks to a number of supportive structural factors.

Introduction

The last 5 years have been volatile, to say the least, with global markets getting rocked by a variety of events, including the COVID-19 pandemic, the rise of US interest rates from nearly zero to almost 5.5% to combat inflation, the short-lived US regional banking failure crisis, and increased global geopolitical conflict. It is quite likely that the upcoming US presidential election in 2024 is going to add even more fuel to the fire. While we cannot predict whether volatility will be higher or lower in the future as compared to recent history, we believe that things will be different over the next 5 years as investors look for stability and alpha in an uncertain future that may include another recession.

The most significant difference in the coming years will be the ‘higher for longer’ interest rate environment that the Federal Reserve has been guiding the market towards. The higher rate environment has had, and will continue to have, significant knock-on effects, as the market looks to adjust to the new normal from an extended period of ‘free money’ that encouraged risk taking to generate returns. These include declines in durationsensitive fixed income securities, including US Treasuries, a sharp drop in M&A volumes and valuations, rising default rates because of borrowers’ debt service burdens nearly doubling, and the threat of a pending recession as the Fed looks to combat inflation by reducing consumer spending by keeping interest rates high.

Private credit – specifically middle market, sponsor-backed direct lending – is potentially uniquely positioned to weather any coming storm while providing attractive risk-adjusted returns thanks to a number of structural factors…

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Man Group
Man Grouphttp://www.man.com
Man Group is a global, technology-empowered active investment management firm focused on delivering alpha and portfolio solutions for clients. Headquartered in London, we manage $151.7 billion* and operate across multiple offices globally. *As at 30 June 2023.

Latest Articles

Origo’s Johansson Returns to Sohn Conference with High-Conviction Pick

Swedish stock-picking boutique Origo Fonder is gaining fresh recognition following a strategic transformation, strong performance, and growing assets. The firm’s evolution into an “Origo...

Commodities Lift CTAs Amid Turmoil

In June 2025, the NHX CTA Index was up as losses in stocks and bonds were outweighed by profits in commodities, but briefly erupting...

Finserve Global Security Fund Boosts Quant Edge with Martin Redgård

Under lead portfolio manager Joakim Agerback, the Finserve Global Security Fund has successfully capitalized on the global surge in defense, cybersecurity, and space investments...

Visio Allocator Storms Back After Difficult March

After posting the worst monthly performance in its 15-year history with a 13.7 percent decline in March, the team behind the multi-strategy Visio Allocator...

Sissener Expands Investment and Sales Teams with Senior Hires

Just months after bringing on Mads Andreassen as Investment Manager, Norwegian fund boutique Sissener AS continues to expand its team with two key additions....

Fenja Capital Deepens Bench as Analyst Moves to Full-Time Role

After earning his Master’s degree in Economics from Aalborg University, Anders Madsen has transitioned from a part-time role to a full-time analyst position at...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.