Goldman Sachs (NYSE:GS) co-head of private credit Vivek Bantwal believes that it’s important to “separate anecdotes from the data,” noting that a handful of stressed situations across bank lending, public credit, and private credit have received outsized attention in recent months.
"When you step back and look at the data, you see a bit of a different picture," Bantwal told CNBC, citing two stats.
Payment default rates (borrowers failing to pay) are about 1.5%, Bantwal said. That's relatively low. Non-accrual rates (loans that are not generating interest because the borrower is behind) are about 2%. Again, fairly modest.
"Those are averages. There's just dispersion around that, so you know we're fortunate. We're at 0.2%, so we're much better than the average," Bantwal said.
‘You See More Losses In Debt, Equity’
The comments come during BDC earnings season, where lenders have been providing updated portfolio disclosures. The executive said weighted average revenue and EBITDA growth across portfolios remains in the high-single-digit to low-double-digit range, broadly consistent with trends seen in public markets.
While acknowledging that defaults could gradually normalize over time, particularly if economic conditions weaken, Bantwal noted that rising losses would not be unique to the private credit sector.
"You'd see more losses in debt and equity," the executive said. "That's not unique to private credit or public credit. It's just a feature of the economy."
The executive also pushed back against concerns that private credit poses broader systemic risks, citing the industry’s structure. Roughly 75% of private credit assets are held in locked-up drawdown funds rather than in vehicles that offer interim liquidity. This limits the risk of rapid investor withdrawals.
BDC vehicles themselves also operate with significantly lower leverage than banks carried prior to the global financial crisis, the executive said, adding that asset-liability matching structures are designed to reduce the risk of forced selling even as redemption activity increases.
Bantwal also highlighted the banking system's reduced exposure to concentrated credit risk. Before the financial crisis, some bank balance sheets had exposure levels approaching 20% in certain concentrated areas. Today, aggregate bank exposure to private credit is estimated at less than 1%, he added.
"For those reasons, we certainly don't see anything systemic," the executive said, while still cautioning that a recession could lead to broader losses across both credit and equity markets.
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