TPG INSIGHTS - Private Credit: Opportunity & Innovation

The rapid rise of private credit has been nothing short of astonishing. More than a decade in the making, the seismic forces contributing to private credit’s ascent, including pricey public market valuations, investors’ desire for structure and control, and continued bank deleveraging, only look set to deepen ahead. Add to that the prospect of structurally higher interest rates, and we believe private credit is poised to play an outsized role in portfolios and the market in the coming years. With this in mind, we sit down with Josh Baumgarten, Co-Managing Partner & Head of Credit at TPG Angelo Gordon, and Amanda Lynam, Head of Macro Credit Research at BlackRock, to discuss the outlook for public and private credit in 2024, what’s driving private credit AUM growth, and the portfolio benefits of private credit allocations. Both Baumgarten and Lynam agree that credit markets have yet to fully adjust to the higher cost of capital, but they see more room to run for private credit AUM. Lynam, for her part, believes her forecast for $3.5T in global private credit AUM by 2028—from around $1.7T today—is achievable considering the asset class’s historical growth and relative size. We then turn to Trevor Clark, Founder of TPG AG’s middle market direct lending business, TPG Twin Brook, T.J. Durkin, Head of TPG AG’s Credit & Specialty Finance business, and Ryan Mollett, TPG AG’s Global Head of Credit Solutions, for deeper discussions on what they see as the biggest pockets of opportunity and innovation in private credit today.

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