Carlyle head of global credit sees USD 23 trillion opportunity in investment-grade private credit

Mark Jenkins, head of global credit at Carlyle, speaks with Creditflux's managing editor Lisa Lee in the latest edition of the Credit Exchange podcast, about the vast growth potential in asset-backed and investment-grade private credit to a roughly $23 trillion market as bank retreat from the space. IG private credit is gaining traction with institutional investors because they are able to get a premium of 100 to 150 basis points over liquid investment-grade spreads, said Jenkins. That’s a proportionally a bigger premium than that commanded by the sub-investment grade (known as direct lending) segment because IG private credit has more complexity. Besides insurance companies, which are familiar with the asset class, pensions and sovereigns are starting to look at IG private credit from a return perspective. Broadly, Jenkins sees three secular trends for past five years that’s caused an increase in private investment: the ramp up of geopolitical risk, which is causing more volatility, a massive onshoring of certain capabilities, and a re-orienting of supply chains. What’s changed is the uncertainly around tariffs and immigration but that too will change. The neutral rate will be much higher than the past fourteen years, predicts Jenkins, and there'll be more competition for capital. To invest, ask where are the points where you can create value, suggest Jenkin. There are inefficiencies in certain geographies such as corporate credit in Europe where the fragmentation and volatility has made traditional financing more difficult and thus created opportunities.