Blackrock predicts that the global private debt market will roughly double to $3.5 trillion by 2028*, one of the most bullish calls to date on the growth of the industry. The Australian Investment Council estimated the size of the private debt market in Australia to be AU$188bn in assets under management ("AUM") at the end of 2023.

Market conditions and most economies have proven surprisingly resilient coming into 2024. Corporate profitability has remained largely intact outside a few sectors, labor markets are still strong, and financial markets are providing an opportunistic window for capital raising. But risks are still lurking, which could derail our base case of a soft landing.

What is happening in the US?

The risks to US growth remain high. It is now almost two years since the Fed started to raise rates. This has been one of the most aggressive tightening cycles in history, especially if the Fed Funds Rate is measured in real terms. It is hard to imagine that such tight policy does not eventually cause recession in the US too; the question is simply on the timing.