The risks in private credit

Blue Owl, Neuberger, Julius Baer and Goldman Sachs on covenants, floating-rate yields, a flood of capital, borrower scrutiny and the rise of PIK.

Private credit deals often tout strict covenants, paired with attractive floating rate yields. But there’s also a huge amount of capital chasing this part of the market - does this mean the scrutiny on borrowers is starting to become weaker? There are some signs of cracks in the veneer - such as the rise of payment in kind (PIK) deals, but should this be a cause for concern for investors?