Private credit: Bullish outlook for 2025

2024 was markedly impacted by a number of significant elections (in the UK and globally) and interest rate and inflation expectations. Looking ahead through 2025, the outlook is more bullish. Here are our reasons why.

• The global private credit markets are expected to continue growing rapidly, driven by lower interest rates, declining default risks, and solid economic strength, particularly in the US and Europe.
• Conversations indicate increased deal activity both in terms of deployment of private credit and fund raising activity by credit funds.
• The private credit market continues to evolve and is a diverse and complex market. The choice of lending vehicles continues to diversify; one example being the rise of rated feeders as a vehicle for insurance companies to invest in private credit. This is reflected in our own deal experience: we have worked with specialist and household-name lenders, debt funds, institutional investors, and high net worth individuals across different asset classes.
• Hot topics for 2025 vary by sector and focus, but are likely to include: levels of control exercised by back leverage providers, control of EBITDA (more specifically EBITDA add backs), movement of assets between funding arrangements, cash leakage, and the importance of servicer/ servicer risk.

To know more about the legal watchlist for 2025 and the deal highlights in 2024, click here: The 2025 outlook for private credit.