Global asset manager Rithm Capital recently released its quarterly Eyes on the Market report, outlining key macroeconomic and sector-specific trends shaping 2025. Of particular interest to specialty finance leaders are the firm’s insights into asset-based finance (ABF) highlighting critical shifts in investor demand, liquidity concerns and market bifurcation.
Asset-Based Finance: A Call for Specialization and Liquidity
The ABF sector is poised for significant growth in 2025, driven by bank balance sheet restructuring and increased demand for private market exposure. Rithm Capital’s report highlights three primary trends shaping the sector:
Strengthening Bank/Private Credit Partnerships: As banks focus on origination and financing roles, asset managers are stepping in to fill the asset management gap. This shift enables more specialized handling of ABF assets, ensuring optimal investment returns.
Shifting Investor Demand: Public markets are increasingly seen as overcrowded and sentiment-driven, prompting a shift toward private markets. Investors are seeking pure-play exposure to specific assets and sectors at scale, opening opportunities for customization at the product, structure and platform level.
Need for Stable Liquidity Sources: While public markets remain volatile and private equity lacks liquidity, ABF offers a structurally attractive alternative. Strong supply pipelines and growing demand are expected to drive further expansion in the sector through 2025.
The Road Ahead: Opportunities Amid Volatility
Rithm Capital emphasizes that 2025 will be a year marked by divergence, dispersion and bifurcation across financial markets. As fixed versus floating rate debt continues to create a clear divide among corporate issuers, high event risk scenarios — ranging from policy changes to geopolitical tensions — could reshape market dynamics.
For specialty finance leaders, Rithm’s insights underscore the importance of navigating liquidity constraints, managing shifting investor demand and capitalizing on structural market shifts. The asset manager maintains that separating signal from noise will be crucial in a year where market fundamentals and risk appetite continue to evolve.
