The private credit landscape stands at a critical juncture amid rising technical defaults, restructurings, and redemption pressures. Our guest, Luca Blasi, draws on his unique experience in valuation, banking, and regulatory oversight, our industry expert observes parallels with the rapid growth, compressed risk premia, weaker underwriting discipline, and opaque pricing prevalent in the pre-GFC era, but highlights a key difference: today's capital is largely held by longer-horizon investors like pensions and insurers rather than highly leveraged banks. Luca analyzes potential spillover effects from private equity's current slower exits, echoes a clear need for better data standards and benchmarks in assessing risks, and makes a compelling case in reinforcing why defensible valuations depend on consistent methodology, transparent assumptions, and strong governance.
Key takeaways:
• Current long(er) horizon investor base is a key difference with pre-GFC environment
• Difficulty in verifying underwriting quality necessitates looking beyond headline defaults
• Limited benchmarks and transaction data make valuations subjective and less comparable
• Strong governance demands independence, documentation, and timely valuations
Guest: Luca Blasi, PhD, FRM, Managing Director and Head of Private Markets Valuations and Regulatory Solutions, S&P Global
Host: Howard Mah-Lee, ABV, CFA, CAIA Senior Manager, AICPA Valuation Services
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