Private credit secondaries set to hit $30bn this year

Increasing demands for liquidity are set to fuel a boom in secondary market activity in the private credit space, according to JP Morgan Asset Management.

Andrew Carter, who oversees JP Morgan’s credit secondaries strategy, told Bloomberg that he expects more than $30bn (£23.5bn) of private credit to change hands in the secondary market this year, up from just $3bn in 2019.

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“Today, deal flow is again being driven by liquidity needs given the slowdown in cash flows created by debt repayments, which has resulted from decreased M&A and capital markets activity,” Carter was cited as saying in the Bloomberg report.

He added that deal sizes have grown to an average of around $200m from $25m.

Read more: What is the true size of the private credit market?

Limited partners such as insurers and pension funds have been looking to offload some of their positions in illiquid assets to raise cash, which has boosted secondary market activity.

Private credit assets are typically bought as long-term investments but some of the largest firms in the space including Apollo, Ares Management and Tikehau Capital have raised funds to buy these stakes in the secondary market.

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