Golub expands private credit loan trading operations

Golub Capital is ramping up its trading operations for private credit deals, signalling growing interest among some industry participants in developing a secondary market for direct loans, according to a report by Bloomberg.

The report cites unnamed sources familiar with the matter as revealing that the firm traded approximately $1bn in private debt during the first half of the year, positioning itself as one of the most active players in the space, alongside major institutions, including JPMorgan Chase & Co, which have also shown interest in the sector.

The trading of private loans is still relatively uncommon in the $1.7tn private credit market, where lenders typically hold onto debt until maturity. However, transactions are becoming more frequent as investors seek greater flexibility to enter and exit positions, whether due to liquidity needs or the desire to free up capital for new opportunities. In some cases, trading offers a way to offload distressed credits. For instance, JPMorgan recently facilitated trades in the debt of Pluralsight, a struggling workforce development firm.

"Private credit has grown so significantly that it's now competing with the broadly syndicated market, leading to increased trading activity as investors seek liquidity and risk management," said Chris Santana, co-founder of Monarch Alternative Capital, a firm specialising in secondary market debt purchases.

A Golub representative highlighted that the firm provides private equity sponsors with various financing options, including liquidity through new issue trading.

While some see secondary trading as a natural progression for private credit—similar to the development of the leveraged loan market, critics argue that it could undermine the value of direct lending, which is valued for its simplicity, privacy, and price stability.

The report quotes Joseph Weissglass, Managing Director at Configure Partners, which advises corporate borrowers on financing: "Borrowers generally prefer to know who holds their loans and often want a say in that process. Lenders that sell portions of their loans typically want to maintain control over the process to ensure they know who their co-lenders are."

A spokesperson from Blue Owl Capital, one of the largest lenders in the private credit market with over $192bn in assets, has stated that it has no plans to create a trading desk for private credit.