Debt Service Coverage in Private Markets Is Improving, Actually | Nicholas Brooks

Private credit does not pose a systemic threat to the global economy, as corporate balance sheets remain robust and interest coverage ratios have stabilized following recent central bank rate cuts. While geopolitical volatility and inflation have pressured margins, underlying EBITDA growth in private markets remains resilient. Unlike the private sector, where debt levels have largely flattened since 2008, government debt has surged, creating the most significant medium-term financial risk. Massive capital expenditure in AI-related infrastructure currently supports the US economy, acting as a buffer against potential downturns. However, the long-term productivity impact of AI remains speculative, and the divergence between fiscally responsible nations and those with ballooning deficits will likely pressure currency markets, particularly the US dollar. Nick Brooks, Head of Economic and Investment Research at ICG, provides these insights based on proprietary data from hundreds of private companies.