Insights & 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

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Insights & Learnings

Market Update & Tariff Commentary April 2025

Leverage Risk: Portfolio Company vs. Fund Level Leverage

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

Is Private Credit Overfunded?

PennantPark Private Credit Mid-Year Review

Deep Dive into BDCs: How to Invest in Growing Businesses

Private Credit, An All-Weather Asset Class

Private Credit: No Longer Just For Institutional Investors

Are Floating-Rates A Good Thing?

Sponsor Vs. Non-Sponsor Backed Lending, What You Need to Know

Business Development Company Terms Explained

Private Credit 101