Blackstone expects razor-thin corporate bond spreads to accelerate investor demand for private credit, where returns remain significantly higher, according to a report by Bloomberg citing Michael Zawadzki, CIO of Blackstone’s credit and insurance group.
“We see excess spread in private credit. That’s a really attractive thing for our clients around the world,” said Zawadzki, speaking on Bloomberg’s Credit Edge podcast.
With investment-grade corporate bond spreads near their lowest levels since the late 1990s, premiums over Treasuries are expected to stay slim, curbing opportunities in public markets. By contrast, private credit continues to offer 150–200bps over both traded high-yield and investment-grade debt.
Blackstone predicts private credit will grow from roughly $2tn today to as much as $30tn, driven by asset-based finance, private investment grade lending, and rising demand for infrastructure financing — particularly data centres supporting artificial intelligence. The firm also sees significant untapped potential from non-US insurers, where allocations to private credit remain far below US peers.
Zawadzki added that Blackstone intends to be “extraordinarily active” in data centre finance, citing its ownership of QTS Realty Trust and AirTrunk. He also pointed to a revival in M&A activity as another catalyst for private lenders.
While some critics warn of overheating in private credit, Blackstone argues portfolio fundamentals remain sound, noting defaults across its 2,000 non-investment grade borrowers were below 50bps over the past year.
