Private credit has experienced notable growth over the last decade, with global assets under management reaching approximately $1.7 trillion in 2024, according to Preqin data. This marks a significant increase from around $260 billion in 2008.
Within this sector, European private credit is emerging as a significant market segment, with assets nearing $500 billion. Its expansion rate is nearly twice that of the U.S. private credit market and now accounts for about 30% of the worldwide private credit landscape.
"In an environment of elevated macroeconomic and geopolitical uncertainty, ever increasing banking regulations, and a possible end to 'American Exceptionalism,' European private credit offers a compelling diversification opportunity," said Mark Jochims, Head of European Private Credit at Morgan Stanley Private Credit.
Jochims explained that U.S. investors can access European private credit without compromising on return potential. "Capital deployed in European private credit could offer higher average credit spreads while retaining the benefits of the U.S. dollar ('USD') base rate through currency hedging. Moreover, European investors can allocate to their domestic markets and protect themselves from potential USD depreciation."
He added that combining allocations to both U.S. and European private credit may enhance diversification, resilience, and return potential for investors.
Morgan Stanley Private Credit focuses primarily on investments in the United States and Western Europe, supporting various types of financings including leveraged buyouts (LBOs), acquisitions, growth capital initiatives, refinancings, recapitalizations, and complex situations for both sponsored and non-sponsored companies.
The firm noted that diversification does not eliminate risk entirely. The views expressed are those of Jochims as of the publication date and may change due to evolving market or economic conditions. These views do not necessarily represent all investment personnel at Morgan Stanley Investment Management or its affiliates.
The material is intended for informational purposes only and should not be considered as financial advice or a recommendation regarding any investment strategy or security.