Private Capital
7 min read
The Quiet Reckoning in Private Credit
Direct lenders spent a decade writing documents for a world of rising values. The workouts arriving now will test every clause.
A market built for the good years
Private credit grew into a three trillion dollar asset class on a simple premise: speed and certainty in exchange for price. Covenant packages thinned as competition for deals intensified, and many documents now give borrowers room that would have been unthinkable in the syndicated market.
That flexibility was rational when enterprise values were climbing. It looks different when a sponsor asks for a second amendment in eighteen months.
What lenders should be reading now
The provisions that matter in a restructuring are rarely the headline terms. They are the permissions to move assets, the definitions that decide who sits in a lender group, and the voting thresholds that determine whether a minority can be left behind.
We are advising clients to review their portfolios with that lens before the call comes, not after.
