USA Trends and Developments Contributed by: Stelios Saffos, Dan Seale, Peter Sluka and Alfred Xue, Latham & Watkins
Private Credit Growth in the US Market The US private credit market grew to USD1.8 trillion in 2024, roughly ten times larger than in the pre-Basel III world. However, bullish mar - ket observers predict the private capital market could more than double in size in the coming decade. Macro trends going into 2025 include falling (or perhaps plateauing) interest rates, and global geopolitical change which will impact all play - ers in the financial markets. However, several trends specific to the private credit space will be important for funds deciding where and how to deploy their capital and for borrowers decid - ing what types of terms and covenants to agree to in order to most efficiently access capital that will allow them to achieve their business goals. There are four key trends to watch in the private credit space: • consolidation of the market and increasing partnership between banks and private credit funds; • the impact of the resurgence of the syndicat - ed loan market on private credit deals; • the perils and potential upside of liability management transactions on private credit deals; and • the strategic use of junior capital to further widen the aperture of capital solutions. Co-opetition: A maturing market leads to new relationships The US private credit market is increasingly marked by consolidation among private credit funds as well as partnerships between traditional banks setting up their own private credit lending arms and well-established private credit funds. This development will reshape the private credit
landscape, offering both opportunities and chal - lenges for market participants. The need for scale is driving this wave of con - solidations of private credit capabilities. Larger private capital firms are acquiring established players to expand their portfolios and enhance their market presence. Recent high-profile acquisitions, such as BlackRock’s USD12 bil - lion purchase of HPS and Clearlake’s acquisition of MV Credit reflect the growing importance of private credit as a strategic asset class for asset managers and private capital players. Banks, which faced regulatory burdens that ini - tially led to the growth of the private credit mar - ket, have developed partnerships with private credit funds in order to expand their access to private credit borrowers. These collaborations highlight the complementary strengths of both parties: banks with their built-out infrastructure for originating loans, and private credit funds which excel at raising, managing, and deploying capital. This co-opetition model allows banks to offload risk while maintaining client relationships and provides private credit funds with access to a broader range of investment opportunities. Citigroup’s USD25 billion partnership with Apollo and Wells Fargo’s USD5 billion collabo - ration with Centerbridge Partners are proofs of concept that will likely be repeated across the investment banking sector. These alliances ena - ble banks to tap into the growing private credit market, which offers attractive yields and diver - sification benefits. For private credit funds, these partnerships provide a steady pipeline of deals, access to money centre banks’ cash manage - ment and other services, and the ability to scale their operations more efficiently.
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