Higher base rates, the shift from banks to private lenders and the proliferation of strategies to access private credit allow the market to grow larger, Zawadzki said. The private investment grade strategies like asset-backed finance and infrastructure credit are “really compelling” in today’s market, he said. The size of the asset-based finance market is about $5 trillion to $10 trillion, he said.
“You’re financing the real economy — you’re not waiting for M&A transactions to happen,” Zawadzki said. “You’re financing consumers, you’re financing data centers, you’re financing energy transition. Huge growth capital expenditures, that’s what’s really driving the growth.”
Blackstone has been active in the asset-based finance markets, leading debt packages for cloud computing firm CoreWeave Inc. tied to assets including microchips. The firm has also increased its exposure to credit card debt, by working with banks such as Barclays Plc on its credit card business as part of an ongoing arrangement.
Spreads in public markets have become “awfully tight” due to investors flowing into the asset class, Zawadzki said. So Blackstone has encouraged clients to enter private credit due to excess spread and the illiquidity premium it offers.