Global Private Debt Report

It was an exceptionally strong year for private debt funds, especially because of floating-rate corporate loans. In the US, leveraged loans gained 13.3%, and in Europe, they were almost the same at +13.4%. This was the best the US index has performed since the global financial crisis. Overall, private debt funds globally had an estimated return of 8.2% through the third quarter of 2023, which was the second-highest return among all asset classes in private markets.

Private debt fundraising in the traditional institutional channel slowed down in the second half of the year. This was due to increased interest in more liquid alternatives offering similar returns. Around $76.7 billion was raised in private debt funds in H2, down from $112.6 billion in H1 2023. However, the total fundraising for 2023 is expected to surpass $200 billion for the fourth consecutive year. Private debt has now become the second-largest private market strategy in terms of annual fundraising, surpassing venture capital.

As the traditional fundraising slowed, private credit strategies saw a shift towards non-traditional sources, like loans, high yield bonds, and treasuries. These alternatives experienced returns ranging from -10% to 30% throughout the year. While loans trailed behind stocks, they continued to outperform bonds. Additionally, retail funds and separately managed accounts for insurers gained momentum in the second half of the year. Despite being outside our tracked universe, the seven largest publicly traded managers accounted for nearly half of all credit strategy fundraising, tapping into new investor markets effectively. Moreover, there was an unexpected surge in fundraising for BDCs that underwent IPOs.

Direct lending remained the top choice within private debt, making up 31.8% of total funds closed in 2023. Mezzanine and infrastructure debt saw significant increases proportionally. The product range within private debt is expanding, moving beyond its traditional focus on direct lending and distressed investments. Investment grade opportunities are emerging as a new area of interest. Asset-backed finance is becoming a focus for private credit managers, gaining ground from banks.

While interest rates are higher today, investor appetite for private debt remains because in addition to the income generation, these funds provide diversification benefits, high risk-adjusted returns, and a hedge against inflation, among other benefits.’’

Jamal Hagler | Vice President of Research American Invest

It was a remarkable year for floating-rate leveraged loans, which make up most of the holdings in private debt funds. The US Morningstar LSTA Index, a good indicator of loan performance, increased by 13.3% in 2023, marking the highest annual gain since the global financial crisis and the second-highest return ever. Similarly, the European equivalent index also saw a significant 13.5% gain, reaching a post-GFC high. The interest component of the LSTA Index's gain was 73.2%, or 9.7%, roughly matching the blended yield to maturity on newly issued LBO loans in the broadly syndicated market. This yield rose from 6.7% in 2022 to 10.4% in 2023, ending the year at a quarterly high of 11.6%.

The consistently high yields are why private debt funds remain attractive and perform well compared to other strategies. Many are offering loans with yields equal to or higher than those in the bank-led syndicated market, which has slowed down except for refinancing and repricing. As a result, private debt is climbing up the performance ladder compared to other private capital strategies and currently ranks second highest, with a one-year return of 6.9% through Q2 2023. Our initial estimate for Q3 2023 suggests a trailing return of 1.9% over three months and 8.2% over 12 months, with less than half of our usual funds reporting so far.

At Marks Sattin Executive Search, we work with a wide range of investor-led and privately-owned businesses across all sectors and locations. With over 30 years of experience, we have helped more than several professionals find their next exciting opportunity.

Apply for an available CFO or Executive Finance job with us today or register your details and we will contact you at the earliest convenience.

posts

Exploring high-growth private equity jobs: Why now is the perfect time to enter

Teaser

Financial Services

Content Type

Career Advice

25/11/24

Summary

Private equity (PE) ranks among the fastest growing areas in today’s finance world. With private equity value up by 36% in value compared to 2023, there’s arguably never been a better time to get

Teaser

Look at the private equity sector and why those considering entering the industry should take action.

Read full article

Neil Burton

private equity

How to start a rewarding career as a Management Accountant

Teaser

Finance & Accounting

Content Type

Career Advice

08/11/24

Summary

The social, cultural, and economic shifts we’ve witnessed over the past number of years have resulted in a drastic, rapid evolution of the UK’s financial sector. To remain viable in these transit

Teaser

Management Accountants play a vital part in financial success

Read full article

Thomas Steel

Top in-demand finance jobs to watch in 2025

Teaser

Finance & Accounting

Content Type

General

08/11/24

Summary

From the advent of fintech and AI to post-pandemic, post-Brexit impacts, the UK’s finance sector continues to undergo rapid evolution. 2024 has also seen the finance world held to greater regulat

Teaser

Join us as we take a look at some of the most in-demand finance jobs in the sector in 2025—many of which Marks Sattin recruits for.

Read full article

Conor Brooks

jobs

Related jobs

Corporate Tax Semi Senior

Salary:

£28,000 - £33,000 per annum

Location:

Leeds, West Yorkshire

Industry

Business Services

Qualification

None specified

Market

Financial Services

Salary

£30,000 - £35,000

Job Discipline

Tax

Contract Type:

Permanent

Description

Reference

BBBH181795

Expiry Date

01/01/01

Author

Aleksandra Taranovskaja

Author

Aleksandra Taranovskaja

Find out more

Corporate Tax Assistant Manager - Birmingham

Salary:

Up to £45,000 per annum

Location:

Birmingham, West Midlands

Industry

Business Services

Qualification

None specified

Market

Financial Services

Salary

£40,000 - £50,000

Job Discipline

Tax

Contract Type:

Permanent

Description

Reference

BBBH181972

Expiry Date

01/01/01

Author

Aleksandra Taranovskaja

Author

Aleksandra Taranovskaja

Find out more

Corporate Tax Assistant Manager - London

Salary:

Up to £55,000 per annum

Location:

London

Industry

Business Services

Qualification

None specified

Market

Financial Services

Salary

£50,000 - £60,000

Job Discipline

Tax

Contract Type:

Permanent

Description

Reference

BBBH181974

Expiry Date

01/01/01

Author

Aleksandra Taranovskaja

Author

Aleksandra Taranovskaja

Find out more

Corporate Tax Assistant Manager - Manchester

Salary:

Up to £45,000 per annum

Location:

Manchester, Greater Manchester

Industry

Business Services

Qualification

None specified

Market

Financial Services

Salary

£40,000 - £50,000

Job Discipline

Tax

Contract Type:

Permanent

Description

Reference

BBBH182004

Expiry Date

01/01/01

Author

Aleksandra Taranovskaja

Author

Aleksandra Taranovskaja

Find out more

Corporate Tax Assistant Manager - Reading

Salary:

Up to £45,000 per annum

Location:

Reading, Berkshire

Industry

Business Services

Qualification

None specified

Market

Financial Services

Salary

£40,000 - £50,000

Job Discipline

Tax

Contract Type:

Permanent

Description

Reference

BBBH182006

Expiry Date

01/01/01

Author

Aleksandra Taranovskaja

Author

Aleksandra Taranovskaja

Find out more

Corporate Tax Assistant Manager - Manchester

Salary:

£45,000 - £55,000 per annum

Location:

Leeds, West Yorkshire

Industry

Business Services

Qualification

None specified

Market

Financial Services

Salary

£50,000 - £60,000

Job Discipline

Tax

Contract Type:

Permanent

Description

Reference

BBBH182325

Expiry Date

01/01/01

Author

Aleksandra Taranovskaja

Author

Aleksandra Taranovskaja

Find out more

Personal Tax Assistant Manager

Salary:

£48,000 - £50,000 per annum

Location:

Manchester, Greater Manchester

Industry

Business Services

Qualification

None specified

Market

Financial Services

Salary

£50,000 - £60,000

Job Discipline

Tax

Contract Type:

Permanent

Description

Reference

BBBH182562

Expiry Date

01/01/01

Author

Aleksandra Taranovskaja

Author

Aleksandra Taranovskaja

Find out more

Corporate Tax Manager

Salary:

£55,000 - £69,000 per annum

Location:

Manchester, Greater Manchester

Industry

Business Services

Qualification

None specified

Market

Financial Services

Salary

£60,000 - £70,000

Job Discipline

Tax

Contract Type:

Permanent

Description

Reference

BBBH182563

Expiry Date

01/01/01

Author

Aleksandra Taranovskaja

Author

Aleksandra Taranovskaja

Find out more

Personal Tax Assistant

Salary:

Up to £30,000 per annum

Location:

Leeds, West Yorkshire

Industry

Business Services

Qualification

None specified

Market

Financial Services

Salary

£30,000 - £35,000

Job Discipline

Tax

Contract Type:

Permanent

Description

Reference

BBBH180210

Expiry Date

01/01/01

Author

Aleksandra Taranovskaja

Author

Aleksandra Taranovskaja

Find out more

VAT Manager

Salary:

£55,000 - £60,000 per annum

Location:

Manchester, Greater Manchester

Industry

Business Services

Qualification

Fully qualified

Market

Financial Services

Salary

£60,000 - £70,000

Job Discipline

Tax

Contract Type:

Permanent

Description

Reference

BBBH182628

Expiry Date

01/01/01

Author

Aleksandra Taranovskaja

Author

Aleksandra Taranovskaja

Find out more

View all jobs