Hello Friends,
Welcome to the February edition of Private Credit Insights where we reflect on the middle market borrowing landscape and share our perspectives to best serve opportunities in your orbit.
The recent talk of tariffs sent ripples throughout the economy with potential for reduced GDP growth and various sectors impacted. For lower and middle market businesses, tariffs could affect supply chains and input costs, particularly in manufacturing and consumer goods sectors.
Amidst these possible challenges, we see promising trends. Real estate cap rates are forecasted to stabilize, implying potential improvement in property values. This shift may present strategic acquisition and refinancing opportunities with industrial and office real estate.
Recent data from the Federal Reserve's Senior Loan Officer Opinion Survey (SLOOS) shows banks have tightened their lending standards for businesses. In the fourth quarter of 2024, 12.5% of banks reported tightening their standards for commercial and industrial loans, a significant increase from 4.8% in the previous quarter.
This bank retrenchment has created a financing gap private credit is well-positioned to fill (ICYMI, we recently announced $50MM in new funding available). Borrowers are increasingly valuing the speed, certainty, and flexibility of private credit solutions. Our Pasadena Private Real Estate division may also be able to help you unlock newly available value. More information below.
At PPL, we're committed to helping you navigate these changes and capitalize on the opportunities presented by the evolving lending landscape. Stay tuned for more insights as we continue to monitor these trends and identify growth and resilience opportunities in your investments.
We thank you for your continued support of Private Credit Insights and all things PPL, welcome your feedback, and invite you to share PCI with anyone whom you believe would find it useful.
Until next month, stay well and financially nimble.
Thank you,
