Sunday, June 7th, 2020
now browsing by day
It’s a lot like the 2008-2009 financial crisis, except when it isn’t. Searching for comparisons to help map a trajectory out of the economic doldrums created by COVID-19 is only natural (and prudent), but the nature, speed and scope of the crisis presents a different and more complex challenge than a decade ago, especially for private debt.
Preqin, a UK-based data and analytics company that tracks the alternative asset community, released a report in late May outlining the lessons it feels should be learned by the private debt market during the pandemic.
Compared to 2008-2009, the private debt market is significantly (37%) larger and more diversified now, and although many credit the financial crisis with birthing the modern private debt market, the pandemic is where it grows up.
The first “lesson” the report references is the importance of liquidity. Portfolio companies are more likely to need increased capital to survive