Global asset management firm Barings predicts that private credit markets in Europe will continue to experience steady growth due to increasing investor interest in diversifying their portfolios beyond the US amid geopolitical tensions. The “attractive relative value” of Europe compared to the US is a key factor driving capital flows into the European private credit sector, according to Stuart Mathieson, Barings’ Sector Head for Europe.
Investors are looking for stable and diversified investment opportunities, and European private credit markets offer a unique combination of stability, liquidity, and diversification benefits. As investors seek to mitigate risks associated with global economic uncertainty, they are turning to alternative asset classes such as private credit, which can provide attractive returns while also offering a relatively low-correlated risk profile.
The growing interest in European private credit markets is also driven by Japan’s institutional investors, who are seeking to expand their international investment horizons. Japan’s pension funds and other institutional investors are increasingly looking beyond the US for stable and diversified investment opportunities, and European private credit markets are seen as an attractive option due to their relatively low correlation with US assets.
Overall, the growth of European private credit markets is expected to continue in 2023, driven by increasing investor interest in diversifying their portfolios and seeking stable investment opportunities amid geopolitical uncertainty.
Source: https://asia.nikkei.com/business/markets/diversification-trend-could-give-private-credit-steady-growth-barings-says