Fears of mounting stress in private credit are not borne out by the data, according to a Bloomberg interview with Hamilton Lane Co-CEO Erik Hirsch, who said defaults remain low and leverage levels stable across portfolios.
The $145bn manager, which also advises on $860bn for institutional clients, said its dataset spanning more than 68,000 funds and 178,000 portfolio companies shows limited signs of systemic risk. Hirsch said private credit defaults are below 2% and declining, broadly in line with historic lows.
He added that leverage ratios are flat or falling, while equity coverage is rising. Addressing recent high-profile credit problems, Hirsch said they were largely concentrated among bank lenders, rather than private credit funds.
He argued that private credit compensation structures, where professionals typically invest alongside clients, creates stronger alignment than traditional banking models.
On private equity, Hirsch said that higher entry valuations following the post-pandemic stimulus surge and strong public markets have weighed on relative performance, though added that he was not seeing widespread bankruptcies.
