Private credit has fared well during this crisis, but the real test may come at the back end, say Barings’ head of private assets Eric Lloyd and CFO of Barings BDC Jon Bock.
Private credit has finally got the crisis it has been waiting for. How has it fared?
Jon Bock: I would say it has passed the test, so far, in that performance has been consistent with what investors expected going into this. Of course, individual portfolios are performing very differently, as you would expect, depending on asset composition. Some industries have been impacted more than others, both positively—logistics is one example—and negatively, such as with restaurants and retail. But it is important to remember that this crisis isn’t over yet, and I think portfolio composition will continue to be a big differentiator going forward, even though the asset class as a whole has proven itself during this challenging time.