Institutional Investor | Fund Manager Says Red-Hot Private Debt Market May Cool Off

By January 22, 2018In The News

Credit shop Highland Capital says the asset class is taking in so much capital that returns are under threat.

Institutional investors pouring capital into the private debt markets has given alternative asset manager Highland Capital reason to be wary about the market’s value proposition.

“There is a significant amount of dry powder on the sidelines that only continues to grow,” the firm said in its 2018 credit outlook, released Monday. “We think this money may end up chasing deals aggressively, likely at tighter spreads.”

The firm joins a growing number of asset managers, including BlackRock and JPMorgan Chase & Co., that have shared their thoughts on the private debt market over the past few weeks. Highland’s views on private debt are far more bearish than those of JPMorgan or BlackRock, with the firm calling the market concentrated and under-deployed.

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