Our Chart of the Week, courtesy Preqin, highlights how both US and European fundraising for private debt came into Covid with a head of steam. That momentum slowed in the wake of the pandemic last year. Since then, however, things have picked up.
Our content partner, Private Debt Investor, recently published some excellent commentary related to investors’ views of the “European opportunity.” One CIO told PDI it started looking more attractive when US yields dropped precipitously last year. Since then, the difference in yields between cross-Atlantic credit markets has not been “nearly as substantial as it use to be. Plus the Euro’s relative strong showing against the dollar gave the investment opportunity another boost.”
In the same article, the CEO of one large private debt asset manager reported that “European private equity firms have around £200 billion of dry powder they need to deploy.” As it does in the US, that’s driving PE deployment, as well as private credit fundraising and investing.
According to PDI, there’s $116 billion worth of funds in the North American market, $85 billion in Europe and $12 billion in the Asia-Pacific region. The asset mix of these efforts primarily includes senior, subordinated, and distressed debt, with about $35 billion raised with interim closes in North America, $22 billion in Europe, and less than $5 billion in APAC.