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Basel III ‘endgame’ is creating a ‘deluge’ of private credit opportunities, says Carlyle

The sale of loans by banks prompted by the so-called Basel III ‘endgame’ is creating an opportunity to generate outsized private credit returns, according to a report by Bloomberg citing Mark Jenkins, Head of Global Credit at Carlyle Group.

While the Basel III framework — which sets international standards for bank capital adequacy, stress testing, and liquidity requirements — has not been finalised, some lenders are already positioning for a potential increase in bank capital requirements by selling investment-grade loans.

According to Jenkins, Carlyle is now purchasing these newly available loans and repackaging them into securities that can offer investors attractive returns.

In an interview for Bloomberg’s Credit Edge podcast, Jenkins said: “Banks, in the US in particular, are managing down their risk-weighed assets, and that is creating a deluge of opportunities for us on what I could call the IG or investment-grade private credit side. There’s some tremendous returns being made on the residual pieces. I’m talking equity-type returns that are in some cases north of 20%.”

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