Personal credit score “dry powder” might present a supply of funding for struggling debtors, S&P International has stated.
The info and analytics agency cited PreqinPro knowledge which discovered that non-public credit score corporations at present have greater than $400bn (£317bn) in capital that has not but been deployed.
Of this, $150bn is earmarked for distressed investments and particular conditions, which means that lenders can discover alternatives or assist challenged portfolio corporations if credit score circumstances weaken.
Learn extra: Julius Baer to overview non-public debt enterprise
“Dry powder out there for personal credit score lending has swelled as buyers have elevated allocations to non-public credit score funds,” S&P International stated in a report.
“Whereas this dry powder serves as a supply of funding for brand spanking new offers and new investments, non-public credit score funds can also maintain a few of this in reserve for reinvestment in struggling portfolio corporations.”
The evaluation went on to say that this pool of capital may very well be a “important supply of funding” for debtors which might be struggling within the face of upper rates of interest and difficult monetary circumstances.
“For corporations on the precipice of default, liquidity is important,” S&P International stated.
Learn extra: Nomura faucets into non-public credit score growth
“The supply of funding, corresponding to by means of non-public credit score, might be the distinction between a default or an eventual turnaround.”
S&P International’s report, titled ‘shopping for time post-default with non-public credit score’, reveiewd greater than 1,200 defaults of publicly-rated issuers since 2008 to grasp the impression of personal credit score on defaulters.
It discovered a modestly larger share of defaults amongst these with non-public credit score funding.
Nevertheless, it additionally famous a shorter common time between defaults for these repeat defaulters with non-public credit score funding, in comparison with these with out.
Learn extra: Citigroup considers new direct lending technique
