How serious are the spillover risks from private credit to public markets?

The private credit market has almost doubled in the past six years. In recent months, and against a backdrop of AI disruption, rising inflationary pressures and other headwinds, the sector has generated alarming headlines. In this research we set out the basis for our view of the scale of the risk posed to public markets, which is as follows: • While there will be areas that are adversely affected, this is not a systemic risk, either to public markets or the economy. • Public investment grade and high yield bond markets have hardly any direct exposure to software, the sector at the epicentre...