Blackstone's Michael Zawadzki on How Private Credit Got so Big

The Odd Lots podcast explores the current state and future prospects of private credit with Michael Zawadzki (Z) of Blackstone Credit and Insurance. Zawadzki argues that private credit's growth stems from its efficiency in connecting borrowers directly with investors, akin to Amazon's impact on retail, and not from excessive risk-taking. He highlights the increasing prevalence of investment-grade private credit, particularly in financing digital infrastructure and AI-related projects, noting the customization and flexibility advantages over public markets. While acknowledging concerns about tighter spreads and potential risks, Zawadzki emphasizes the importance of strong documentation and active portfolio management to ensure favorable outcomes, viewing the industry's future as one of continued growth but with greater performance dispersion among managers.