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Summary
The alternative credit space in the US and the European loan markets have been seeing stellar growth thanks to a shift away from traditional lenders.
Direct lending has reached new peaks; direct lenders led or agented several multi-billion-dollar facilities last year, shattering deal records.
There is a paradigm shift, marked by growing scale, shorter deal cycles, new financing structures (e.g., uni-tranches), and 'covenant-lite' issuances. Investors and lenders alike need to rethink their investment practices, be it underwriting, due-diligence, or identifying exclusive opportunities with consistent returns.
In this milieu, CRISIL hosted a webinar titled 'Alternative credit at a crossroads - Time to reset, readjust and refocus', where global experts shared their insights on the evolution of the alternative credit space, including the regulatory developments, changing underwriting and due-diligence methods, headwinds, and strategies to sustain alpha amid intensifying competition. The topics included:
Outlook for the alternative credit space over the next 12 months amid headwinds such as rising inflation and interest rates
Roadblocks the alternative credit firms are likely to face in ESG integration
Balancing the underwriting standard and lending strategy amid a record deal flow with a surge in covenant-lite loans and shorter deal cycles
Pricing risk and finding a consistent premium amid increased competition
Alternative credit at a crossroads - Time to reset, readjust and refocus