FUNDRAISING NEWS | November 26, 2024
In its latest private credit outlook, Invesco said private credit will continue to serve an important role as a strategic income source in the portfolios of institutional investors, especially in the face of declining interest rates.
The report notes that despite a shifting monetary policy and interest rate environment, loans, particularly senior secured loans and collateralized loan obligations (CLOs), continue to provide steady income due to their ability to retain investor capital during rate decline cycles, driven by favorable loan issuer fundamentals and reduced interest expenses.
Looking ahead, Invesco predicts continued strong returns in private credit, with all-in yields in direct lending expected to remain well above historic levels. The firm's experts also highlight an improving macroeconomic environment in 2025, with inflation moderating and the possibility of a "soft landing" for the economy, which bodes well for corporate borrowers.
The report also addresses opportunities in distressed credit and special situations, particularly in small-cap markets where many businesses face high interest expenses, saying these companies remain operationally sound and that it sees a unique opportunity to offer liquidity solutions with structured senior secured positions.
Finally, Invesco said a more favorable environment for M&A and other liquidity events, including IPOs, on the private equity side should provide more direct lending financing opportunities.
