@Sage Advisory
After a decade of rapid growth and mainstream adoption, private credit faces an inflection point as a number of pressure points are building: (1) regulatory scrutiny is rising; (2) credit quality is weakening; (3) structural stress fractures are more apparent; and (4) liquidity mismatches are growing.
These developments do not suggest an imminent systemic crisis. At Sage, we believe the private credit markets will remain a vital financing channel and a durable source of yield for sophisticated and well-informed investors. However, these developments do underscore elevated tail risks and the need for investors to re-underwrite marks, map liquidity triggers, re-assert covenant discipline, and demand robust valuation governance. Doing so will help better position portfolios to withstand market dislocations while retaining strategic exposure to an asset class that will continue to reshape modern capital markets.
