Read our latest Private Markets quarterly article Rebalancing for Rising Rates discussing which private markets strategies are likely to outperform in a rising interest rate environment, by our Lead Alternative Portfolio Manager, Reji Vettasseri.
Key conclusions:
Private credit favoured over highly levered LBO deals
– Private credit set to earn higher yields as rates rise, are downside protected against macro and valuation headwinds, and do not have the mark-to-market volatility of public bonds
Operational value creation favoured over financial engineering
– Private equity and private credit strategies focussed on fundamental value creation more sustainable than those reliant on juicing up returns with high debt loads if leverage levels drop