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Financing the Economy 2020

New research examines the role played by private credit in supporting the global economy.

Financing the Economy 2020, a global research report produced by the Alternative Credit Council in partnership with Allen & Overy, assesses the role played by private credit managers in supporting business, particularly during the Covid-19 pandemic, as well as the prospects for the year ahead.

The report, which is based on a survey of private credit managers in different regions, as well as a series of one-to-one interviews and case studies, considers the outlook for private credit in 2021, the lending environment after the pandemic, and preparing for a recovery.

Report highlights

Private credit managers continue to lend: Private credit managers expect to lend over USD100bn to SMEs and mid-sized businesses during 2020.
Investor appetite for private credit remains undiminished: The disruption to the economy during 2020 has created demand among investors for assets that can generate income, provide diversification or act as a hedge during equity bear markets.
Private credit managers have demonstrated their value to borrowers: Non-bank lenders have been vital sources of finance to borrowers during 2020, particularly those who are outside the typical risk appetite of banks or were unable to access government liquidity schemes.
Flexibility is a prized asset: Investors and private credit managers are positioning themselves to adapt to the greater range of lending opportunities they anticipate in 2021.
Not all private credit managers are created equally: The impact of Covid-19 has been uneven across different regions and sectors within the economy, but it has also highlighted differences in deal origination, documentation standards and risk management capabilities within the sector.
Raising capital to support the recovery: Private credit managers continued to raise capital effectively during 2020, with newer funds largely being an evolution of existing strategies.

Views of private credit managers

are bullish about their appetite to deploy capital

expect more capital allocations to distressed debt opportunities

are anticipating greater investment in liquidity/bridge finance during 2021

have offered a moratorium on interest on their loans

are bullish about their appetite to deploy capital

expect more capital allocations to distressed debt opportunities

are anticipating greater investment in liquidity/bridge finance during 2021

have offered a moratorium on interest on their loans

View video

Podcast

In this podcast, Kamar Jaffer, Counsel in A&O’s Middle Eastern funds and asset management team is joined by Jiri Krol Deputy CEO of the Alternative Credit Council and Todd Koretzy, Partner in A&O’s Leveraged Finance practice, to discuss how private credit will cope in an uncertain economic outlook, what investment opportunities could arise and the challenges that face the sector globally. Such themes were examined in the latest Financing the Economy report, exploring why private credit is vital to continued economic growth and a key source of financing to businesses.