What's Going on in Private Credit?
Apr 09, 2026•39 min•Ep. 78
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Summary
This episode explores the transformative journey of the sub-investment grade credit market, from its origins in the 1970s to the rapid expansion of direct lending post-GFC. Howard Marks highlights how direct lending's growth mirrors historical investment fads, now facing headwinds from AI's impact on software debt and the consequences of rising interest rates for private equity. He draws insights from the 1929 crash, emphasizing human nature's role in market cycles, and outlines Oaktree's disciplined approach to navigating these complex credit environments.Episode description
In his latest memo, Howard Marks discusses the evolution of the sub-investment grade credit market from its beginnings in the 1970s to its present state. He focuses on the rise of direct lending following the Global Financial Crisis, identifying the reasons for its fast growth but also the issues created by rapid capital deployment. Looking ahead, he describes the entwined fates of direct lending and private equity, with the performance of private equity portfolio companies being a key determiner of the future success of direct loans.
You can read the memo here (https://www.oaktreecapital.com/insights/memo/whats-going-on-in-private-credit).
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