Historic magnitude of dislocation in private credit markets due to COVID-19 and the potential opportunity set going forward.
There is no doubt that news surrounding COVID-19 and the heightened volatility in the publicly traded markets due to this global pandemic have captivated nearly everyone’s attention in recent months. The private credit markets, which tend to be less thoroughly discussed, are similarly dealing with unprecedented dynamics. Over the past months, we have engaged with our partners—in a “socially distanced” manner— in hundreds of calls with the participation of portfolio companies, private equity sponsors, banks, law firms and industry experts—as well as our own investors. In this paper Benefit Street Partners outline the historic magnitude of the dislocation, provide a summary of discussions and key observations that we have shared with those partners. Finally, we share our view on what might be in store for the future of private credit. While the steadfast protection of our existing investments is at the forefront of our thinking, we are also enthusiastic about the potential opportunities that have been created for well-capitalized private debt managers. Benefit Street Partners L.L.C., a wholly owned subsidiary of Franklin Templeton, is a leading credit-focused alternative asset management firm established in 2008, managing assets across a broad range of complementary credit strategies.