Insights & Learnings

Why Private Credit Still Shines in a Falling Rate Environment

The Federal Reserve cut interest rates again last week, a move that has many investors reevaluating their fixed income allocations. While private credit is often celebrated as a winning strategy in rising rate environments, it’s also uniquely positioned to perform well when rates begin to decline.

November 3, 2025InInsights & Learnings

Auto Parts Giant First Brands Implodes: A Case Study in the Perils of Covenant-Lite Lending

The recent Chapter 11 bankruptcy filing by First Brands Group, the global supplier behind popular aftermarket brands like FRAM filters and Raybestos brakes, is a stark warning about the vulnerabilities hidden within the modern leveraged loan market. The company’s collapse, fueled by massive debt and complex, opaque financing, highlights the consequences of the aggressive lending standards prevalent in the upper middle market.

October 17, 2025InInsights & Learnings

2025 Private Credit Mid-Year Review

Private credit remains attractive amid “Goldilocks” mix of elevated interest rates and resilient fundamentals Add-on acquisitions sustain private lending activity while public markets faced tariff-driven volatility Interest rate cuts likely coming soon; loan yields to remain historically attractive Capital concentration pressures mega funds to deploy capital at massive scale The core middle market advantage strengthens as competition intensifies in large-cap and syndicated markets

September 30, 2025InInsights & Learnings

Payment In Kind Concerns? PIK Your Managers Wisely

PIK is a financing mechanism that allows borrowers to pay interest with additional debt rather than cash. While this tool can temporarily relieve liquidity pressure, it does so by increasing future repayment obligations and repayment risk. Historically, PIK was primarily associated with distressed credit. Today, however, given elevated corporate leverage and the higher cost of debt in an elevated interest rate environment, many private credit managers are increasingly introducing PIK even into senior loan structures.

August 25, 2025InInsights & Learnings

Market Update & Tariff Commentary April 2025

President Trump has followed through on his campaign promise to introduce or increase tariffs on over fifty nations. Tariffs are more likely to impact large corporations with overseas supply chains, not our service-oriented companies in the core middle market. Only 7% of our firmwide portfolio has a significant direct exposure to tariffs. We emphasize the importance of disciplined underwriting and conservative loan structuring, even as other lenders have relaxed their standards to win business. For...

April 14, 2025InInsights & Learnings

Leverage Risk: Portfolio Company vs. Fund Level Leverage

We believe effective management of leverage at both the portfolio company and fund levels is crucial for balancing risk and return in private credit investments. By focusing on companies with conservative debt-to-EBITDA ratios and employing prudent fund-level leverage practices, PennantPark seeks to mitigate default risks and pursue attractive risk-adjusted returns for investors.

March 28, 2025InInsights & Learnings

Private Credit: The Core Middle Market Advantage Amid Rate Cuts & Spread Compression

With lower interest rates and spread compression, many investors are questioning the attractiveness of private credit as loan yields shrink and competition heats up. The core middle market has remained resilient to spread compression, driven by less competition compared to the crowded upper middle market and banks.

January 16, 2025InInsights & Learnings

Is Private Credit Overfunded?

Middle market borrowers increasingly turn to private credit as banks tighten lending, with demand fueled by private equity growth and companies staying private longer. Private credit offers investors income stability through reliable contractual cash flows, built-in inflation hedging, low correlation to public markets, and consistent performance in volatile conditions. Growing demand and alignment with private equity expansion proves that private credit is essential.

December 3, 2024InInsights & Learnings

PennantPark Private Credit Mid-Year Review

Private credit is not a monolith; distinct trends emerge across market segments. The core middle market flies under the radar while competitive pressures mount at the top end of the market. Yields remain historically attractive even after spread compression. Deal flow bounces back with a buyout rebound on the horizon.

July 29, 2024InInsights & Learnings

Deep Dive into BDCs: How to Invest in Growing Businesses

Investing in Business Development Companies (BDCs) provides investors with the potential for income alpha and lower volatility compared to traditional fixed income. Because of their exposure to private markets, BDCs can potentially increase portfolio diversification and reduce overall portfolio risk.

June 18, 2024InInsights & Learnings

Private Credit, An All-Weather Asset Class

Private credit can provide investors with diversification benefits due to its low correlation with traditional asset classes. Unlike public markets, it has historically delivered consistent income regardless of market conditions, offering a potentially more stable investment opportunity.

May 7, 2024InInsights & Learnings

Private Credit: No Longer Just For Institutional Investors

Q&A with Scott McCabe, Head of Private Wealth Distribution

April 19, 2024InInsights & Learnings

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