-- Risky private credit lending is vulnerable to higher interest rates and debt crunches, according to watchdogs across the globe that are seeking more transparency from the industry.Wider War in Middle East Could Tip the World Economy Into Recession
“The industry has been growing quickly and it’s attracting attention because it’s now an important part of the economy,” said Stuart Brinkworth, a partner at legal firm Mayer Brown. “But regulators struggle to understand the asset class and because of that the inclination is to assume that more regulation must be the answer.”
Earlier this year, the European Union reached an agreement on new rules for private debt funds and other alternative asset managers that will require them to enhance liquidity management. That will aid any fund managers dealing with large outflows during times of financial turbulence, according to the July statement.
Two of the world’s biggest private credit firms have launched funds that will take far less profit than is usual for the industry — another sign of how power has started shifting toward investors in this $1.5 trillion market. Private lenders are seeing an uptick in demand for niche capital relief trades, according to Magnetar Capital’s David Snyderman.
Indian conglomerate Hinduja Group is in talks with private credit funds to raise about $800 million to back the acquisition of Reliance Capital.
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