July 27, 2023 - Private Credit has developed a reputation of being enormous, potentially risky and a full-on substitute for BSL loans. Recent articles dispute each of these contentions. First, Barclays Research team argues that instead of being a $1.4 trillion asset class – roughly the size of the BSL institutional market – the US private credit space is closer to $700 billion on an apples-to-apples basis. (Private credit stats typically include dry powder, BSL stats look at outstanding loans.) Second, the Federal Reserve’s recent Financial Stability Report commented that “Financial Stability Risks from Private Credit Appear Limited”. And third, KKR argues in the FT that rather than being full substitutes, Private Credit and BSL have a symbiotic relationship. The LSTA has long argued the last two points and we’ll defer to Barclays on sizing the asset class.

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