(Bloomberg) -- The private credit industry is still at the beginning of expansion with growth likely to be driven by investment-grade assets, according to Blackstone Inc., the world’s largest alternative asset manager.
“We’re seeing this long-term structural shift toward private credit, and I think we’re in the very early days,” said Gilles Dellaert, global head of credit and insurance at Blackstone, in an interview with Bloomberg Television in Tokyo.
While private credit started off in more leveraged assets, the market for investment-grade lending is a “much larger addressable market” of potentially $30 trillion or more, according to Dellaert.
Blackstone’s credit arm grew to be its largest in the third quarter with $354.7 billion in assets, surpassing real estate. The $1.1 trillion alternative asset manager has been ramping up growth in its debt business as investors chase higher returns in the $1.7 trillion private credit market.
Investors are looking for the “relative spread they can earn by allocating to private credit,” according to Dellaert. “That spread has held in very nicely, particularly in the investment grade business, where we generate around 185 basis points of excess spread on our record deployments that we saw so far year-to-date.”
Still, the opaque nature of the private credit market and its rapid growth are also attracting greater scrutiny from global regulators.
READ: Top Regulators Call Out Valuation Risks in Private Credit
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