PitchBook – Global Private Debt Report, 1H 2023

The Global Private Debt Report by PitchBook for the first half of 2023 reveals that institutional investors continue to show strong interest in private debt strategies, with fundraising commitments reaching $94.9 billion, surpassing the previous year's $91.4 billion. The report suggests that 2023 will mark the fourth consecutive year in which institutional commitments exceed $200 billion, thanks to the stronger historical seasonality in the second half of the year. While retail fundraising remains an important growth factor for private credit managers, activity slowed down in H1 2023, and competition in this sector is increasing. The report states that retail funds committed to private debt funds in H1 2023 amounted to an estimated $16.6 billion, which is below the quarterly average of $12.0 billion in 2022. Moreover, several new credit-oriented perpetual vehicles were launched by sponsors such as Fidelity, Eaton Vance, KKR, PIMCO, and Variant, further intensifying the competition. The preferred substrategy in private debt continues to be direct lending, accounting for 32.0% of the overall mix of funds closed in H1 2023. Mezzanine follows closely behind with a share of 27.9%, experiencing significant growth compared to the previous year. Private debt strategies have shown strong performance, protecting principal and delivering attractive returns in 2022. While stock and fixed-income investors suffered significant losses, the Morningstar LSTA US Leveraged Loan Index remained relatively unchanged at -0.6%. Private debt funds performed even better, returning 4.2% according to PitchBook's estimate. Private debt outperformed most other private market strategies and even exceeded the private equity aggregate return of -1.2% for the year. The preliminary estimate for Q1 2023 suggests a return of 0.4% for the quarter.