An executive at an investment management firm is raising a red flag suggesting that private credit is overvalued, and complacency is creeping in. With fundamentals deteriorating in the most leveraged portions of the market, a PIMCO managing director recently stated investors are not being compensated enough for the risks – and provided a key stat that caught my eye:
I would be interested to see the data subset that was used to come to this broad conclusion. This observation (a fixed-charge coverage below one in nearly half of companies) does not align with my direct experience as a professional who works primarily with private equity portfolio companies as Interim CFO.
If someone is seeing this cash flow issue broadly (i.e., not concentrated within a specific challenged industry), connect with me, as I would enjoy a discussion on this topic.
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