Private credit endures across environments

Private credit has proven to be a reliable investment option, with its risk-return profile benefitting investors in many environments. Oaktree’s analysis shows that most private credit loans are structured with floating rate coupons, meaning investor income rises when base rates increase. However, when base rates fall, income from floating-rate coupons does, too. Despite this, there are factors that can cushion the impact of this decrease. Borrowers may benefit from lower rates as their interest expenses fall, resulting in potentially higher cash flows, interest coverage and reducing default...