The rise of private credit has become one of the biggest stories in global financial markets

and has led to significant changes in the ways investors allocate their portfolios and companies

raise money. So will the increasing uncertainty about the economic outlook reverse this trend or

accelerate it? I'm Alison Nathan and this is Goldman Exchanges. Today I'm joined by James Reynolds,

global co-head of private credit and Goldman Sachs Asset Management, and by Lotfi Keroui,

our chief credit strategist and the head of credit, mortgages, and structured products research.

James Latfey, welcome back to exchanges. Thanks for Abna. Thank you.

Lotfi, lots of volatility in the markets right now, but today we're going to focus on private

credit markets.

So give us some context.

How much has the asset class grown in the past few years and what's really driving that

growth?

Well, it's been in focus because it's a young and new asset class that has experienced dramatic growth over the last 15 years.

And so I think the reason why it's attracted so much attention is that everyone is expecting to see how it behaves in a full-blown sort of recession or a cyclical downturn.

But let me take a step back actually and kind of define what we mean by private gutted.

But if you define it as any sort of debt claim that is privately negotiated without any third party being involved, such as a bank, the total AUM, if I use a conservative estimate, is probably to the tune of $2.1 trillion.

So that is smaller than private equity, which is over $11 trillion,

but that is on par with comparable public debt markets like the high-yield bond market, for example,

or the BSL or the broadly syndicated loan market. And so private credit, if you define it that way

and has unquestionably grown into becoming a distinct

and scalable asset class for most asset allocators globally. That figure in 2010 was less than

$100 billion just to put things in context. Like, what type of strategies does that involve?

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