What's Going on in Private Credit?

Howard Marks explores the evolution and potential risks within the private credit market, particularly direct lending. He pinpoints key historical developments that shaped the credit sector, including the acceptance of non-investment grade debt, the rise of leveraged buyouts, and the expansion of direct lending to individual investors. Marks draws parallels between the current enthusiasm for direct lending and historical investment bubbles, cautioning against excessive optimism and lowered underwriting standards. He also addresses the impact of rising interest rates and technological advancements like AI on private equity and software debt, emphasizing the importance of disciplined investing and a balanced perspective between belief and skepticism.