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What’s behind the boom in direct lending?

23 January 2024 |
Active ESG
In our latest video insight, Laura Vaughan, Head of Direct Lending, looks at the surge in demand for private credit in recent years and outlines where she believes the best opportunities lie for investors.
  • An allocation to direct lending, focused on the right strategy, can provide an investor with low volatility, limited correlation to other asset classes, diversification to underlying industries, quarterly cash income and an element of inflation protection. 
  • The sharp rise in interest rates over the last two years has resulted in higher yields at a time when inflation has been rising, allowing the asset class to act as an inflation hedge to a certain degree.
  • On top of a compelling return, the northern European lower mid-market senior secured segment offers less downside risk and provides one of the best legal environments to negotiate any restructurings.

Please see the Private Markets Insight Q2 2023 report: Locating the sweet spot in direct lending.

For further information on Federated Hermes’ European Direct Lending capabilities, please click here.

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