2023 Private Debt Outlook - Stable Performance

Stephen Nesbitt discusses Private Debt as an All-Weather Asset Class during the Cliffwater 2023 Private Debt Outlook webinar.
Looking back on 2022, the overriding concern has been stagflation, and its impact on the capital markets. Both stocks and bonds are down this year. Worse, stocks and bonds are now correlated. We’ve been arguing for years that private debt is an all-weather asset that we expect to perform well across all market environments, both absolute and relative returns. The Cliffwater Direct Lending Index (CDLI) return is a proxy for private debt and historically averages a positive return when bonds have negative returns.
The relative strong performance for private debt is not unexpected.
It follows the narrative we've advocated for over a decade.
1. Private debt protects against recession because of its senior secured position in the capital structure
2. Private debt protects against inflation and rising interest rates because of its floating rate income structure
Further reading on Private Debt: www.cliffwater...
#privateequity #privatecredit #privatedebt
Steve is Chief Executive Officer and Chief Investment Officer of Cliffwater and is primarily responsible for the day-to-day management of Cliffwater Corporate Lending Fund (CCLFX) and the Cliffwater Enhanced Lending Fund (CELFX), an SEC registered credit interval fund focused on the US corporate middle market.
Steve is recognized for a broad range of investment research. His papers have appeared in the Financial Analysts Journal, The Journal of Portfolio Management, The Journal of Applied Corporate Finance, and The Journal of Alternative Investments. His private debt research led to the creation of the Cliffwater BDC Index, measuring historical BDC performance, and the Cliffwater Direct Lending Index, measuring historical performance for direct middle market loans. Steve authored the book, Private Debt: Opportunities in Corporate Direct Lending, Wiley Finance (2019) which provides the analytical and empirical underpinnings of the private debt market.
This is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve.
Statements that are nonfactual in nature, including opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice. The opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice. Unless otherwise indicated, dates indicated by the name of a month and a year are end of month.