Letter from Stockholm

Our recent visit to Sweden was the 12th country in our 2023 global private credit tour meeting clients and prospects. The Nordic region has always been strong in terms of investor interest and commitment to alternatives. Amid higher rates, that appetite has sharpened, as our colleagues at Arcmont (and Nuveen for real estate and green energy) who joined us attested.

As with all jurisdictions, it seems private credit has captured an increasing share of investor allocations. Private credit’s traditional benefits – price stability, yield premiums, conservative structures, and portfolio diversification – are well understood. Now you can add double-digit all-in, unlevered yields as well as lower borrower leverage and even tighter structures.

Investors shared similar concerns about the impact of higher rates on borrower defaults. Common questions included how loan values are being affected, what’s the default rate now compared to a year ago, and how are you dealing with troubled situations?