Speaking at HSBC’s investment conference in Hong Kong, Apollo Global Management president Jim Zelter addressed concerns about the rapidly growing private credit market, asserting that it is “not a bubble” and unlikely to experience “massive losses” during an economic downturn.
“The biggest question I get from everybody around the globe is, is private credit a bubble?” Zelter said. “And I would say it’s not a bubble, but it’s certainly been long in the tooth in the cycle.”
He distinguished the current situation from a true bubble, explaining: “Bubble means there’s very much irrational actions, and while I think there are folks that are probably taking [a] more aggressive portfolio construction than I would take, I don’t think it’s a bubble where you’re going to find the massive losses that you saw in other bubbles since I’ve been around.”
Apollo, a dominant player in private credit, has expanded beyond traditional mid-market lending to provide financing for some of the world’s largest companies. According to Zelter, credit is “about a $600bn business” for Apollo, significantly larger than its $100bn private equity business.
The comments come as private credit groups have seen substantial growth with rising interest rates driving increased investor interest. The IMF previously reported that private credit assets had grown to approximately $2.1 trillion but warned that “the sector has never experienced a severe economic downturn at its current size and scope.”
For the complete article, visit the Financial Times.
