A review of private credit in the immediate wake of COVID-19

Journal of International Banking & Financial Law has published the article “A review of private credit in the immediate wake of COVID-19,” written by Akin Gump finance partners Amy Kennedy and Clare Cottle and corporate associate Herman Park. The article examines the evolution of private credit lending and the benefits of the private credit model, among other topics.

According to the authors, the rise of private credit lending began following the aftermath of the global financial crisis, as quick flexible financing solutions became a vital solution for struggling businesses. They added, “The strengths of the private credit model may well permit those institutions to advance their position further in the post-pandemic landscape. Whilst all private credits funds have as their objective a strong economic return, the context of each investment will determine the optimal approach each institution will employ to achieve that result.”

Further, the authors argue that private credit lending has become particularly competitive with traditional bank lending, which has slower processes and offers limited support for nuanced credits. The authors said, “Despite private credit originally having been viewed only as an alternative to traditional bank-debt for mid-market “plain vanilla” transactions it has arguably now become the most innovative, flexible and competitive part of the finance market.”