At the Future Investment Initiative (FII) conference in Riyadh, top executives from the private credit industry downplayed fears of a full-blown bubble — but warned of loosening lending standards in the market for loans to large corporations.
“The risk is when you have too much leverage and not enough liquidity. I don’t see that right now, even in private credit,” said Anne Walsh, CIO of Guggenheim Partners. “But there are signs of overleverage and weaker covenants in large-company lending.”
Competition among lenders has driven down margins and fueled aggressive deal structures, with some analysts describing “froth” in parts of the market.
David Manlowe, CEO of Benefit Street Partners, noted that while some segments may indeed be in bubble territory, “overall, it’s probably not bubbly.”
Meanwhile, Robert O’Leary, co-CEO of Oaktree Capital Management, warned that the AI-driven boom could be inflating broader credit markets, particularly in software-linked direct lending.
Despite rising competition, panelists agreed that strong liquidity, fiscal stimulus, and structural demand continue to support private credit’s long-term outlook.