As of April 2024, the private-credit market is experiencing heightened scrutiny, with a default rate reported at 5.8% by Fitch Ratings. This comes amid concerns that software firms, having borrowed from private-credit funds, could struggle to repay loans due to challenges posed by AI advancements. However, data indicates that risk in corporate credit is declining, with leveraged-loan defaults at 4.9%, down from 5.7% in late 2025, suggesting the economy is stable and potentially improving.
Apollo Global Management has noted that private-credit defaults have remained steady for two years, further supporting the notion that the current panic may be overblown. This has opened up opportunities for investors, particularly in equity-focused funds such as the Liberty All-Star Growth Fund (ASG), currently trading at an 11.2% discount, significantly lower than its five-year average of 3.7%.
The swift evolution of AI technology, expected to deeply impact various sectors within the next 18 months, further underscores the potential for significant market shifts. Investors may benefit from strategically positioned funds that focus on these anticipated changes while taking advantage of current market conditions.
