He explained that artificial intelligence could lead to a wider divergence in corporate performance. As a result, some companies may perform exceptionally well, while others struggle significantly. According to Meister, this dynamic could affect private credit more heavily than private equity. Investor scrutiny of the roughly $2trn private credit market has increased in recent months. Concerns centre on weakening credit quality and the exposure of many lenders to software companies whose business models could face disruption from artificial intelligence. Meister noted that private credit default rates averaged 2.6% annually over the past decade. He said defaults had been 'so low' that lenders built diversified portfolios of loans and then applied additional leverage. The developments have prompted closer scrutiny of a market that has expanded rapidly in recent years. Private credit has attracted significant institutional investment while increasing its role in corporate lending....
learn more
