Private Credit – Better than Ever (Fifth of a Series)

Will investor worries about a recession’s impact on private credit come true?

We asked this question at the end of last week’s installment in our special series on the “new” post-COVID private credit. With all the distractions related to the side-effects of the coronavirus on the economy and our daily lives, it’s a challenge to remember that US GDP dropped 33% in the second quarter – the sharpest decline in history.

What seems also clear, though, is that the third quarter is poised for one of the biggest economic rebounds, with estimates around 30%, depending on the impact of the various stimulus programs that have (or have not) been put in place.

If that trend holds, and if there’s no second virus waves (two big “ifs”), the 2020 downturn may not even qualify technically as a recession. Nevertheless businesses will remain in either “have” or “have-not” status for the foreseeable future. COVID-sensitive sectors are not expected to recover anytime soon, while more B2B-focused businesses have been recovering for months.