A private credit review in the immediate wake of COVID-19 – Finance and Banking

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United States: A review of private credit in the immediate wake of COVID-19

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Journal of International Banking and Financial Law published the article “A Review of Private Credit in the Immediate Wake of COVID-19”, written by Akin Gump Financial Partner Amy Kennedy, Corporate Partner Clare Cottle and Associate Herman Park. The article examines the evolution of private credit and the benefits of the private credit model, among other topics.

According to the authors, the boom in private lending began in the wake of the global financial crisis, with flexible and fast financing solutions becoming a lifeline for struggling businesses. They added: “The strengths of the private credit model may well enable these institutions to advance their position in the post-pandemic landscape. While all private loan funds aim for a strong economic return, the context of each investment will determine the optimal approach each institution will use to achieve that result. »

Additionally, the authors argue that private lending has become particularly competitive with traditional bank lending, which has slower processes and offers limited support for nuanced credits. The authors said: “Although private credit was originally seen only as an alternative to traditional bank debt for ‘plain vanilla’ middle market transactions, it has become arguably the most innovative part , the most flexible and competitive financial market”.

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