Private credit returns are likely to ease in the coming quarters as spreads narrow and interest rates fall, says Josh Easterly, Co-Chief Investment Officer at Sixth Street Partners, according to a report by Bloomberg.
Easterly told Bloomberg TV that investors should anticipate underwhelming returns compared to what they were expecting versus outright losses, noting that yield compression and tighter spreads are beginning to weigh on performance expectations across the asset class.
He added that in order to produce desirable returns, firms need to have the ability and scale to shift across different strategies, such that they do not have to do direct lending if there is not the desired risk-reward ratio.
